FRAUD RESOURCE CENTER
En español | Debt collection regularly ranks among the top consumer complaints to the Federal Trade Commission (FTC). The agency notes a range of deceptive and abusive tactics used to get debtors to pay up, including repeated phone calls, verbal harangues, and threats to disclose debts to employers and family members.
But many Americans are confronted by a problem even scarier than aggressive debt collectors: aggressive fake debt collectors, who try to bully their targets into paying money they don’t owe.
The FTC calls it “phantom debt collection.” You get a call, text, email or social media message from someone claiming to be a debt collector, law enforcement officer, attorney or process server. They insist you have a delinquent payday loan, credit card balance or some other sort of consumer debt and demand immediate payment of hundreds or thousands of dollars, threatening lawsuits or imminent arrest if you don't comply.
Occasionally such situations arise from mistaken identity: A legitimate debt collection agency slips up, confusing a consumer with a debtor who has a similar name (an error known as “debt tagging”). Often, though, it’s a scammer, combining bits of personal information harvested from sources such as old loan applications and hacked accounts to fabricate bogus debts that consumers might be deceived into thinking are real. Some large-scale operators package these phony liabilities into portfolios and sell them to debt brokers for collection.
In recent years, federal and state authorities have upped the pressure on abusive collectors and phantom-debt predators. A joint crackdown by the FTC, other federal agencies and authorities in 16 states produced more than 50 cases in 2019 and 2020, putting many collectors out of business and securing multimillion-dollar judgments.
But the problem remains widespread. In 2021, the FTC received more than 77,000 consumer reports of collectors using abusive or threatening tactics or trying to collect money that wasn't owed, a 45 percent increase from the previous year. And a federal rule change that took effect in November 2021 allows collectors to contact debtors by email, text or social media direct message as well as by phone (previously the only sanctioned method), opening new routes for fake-debt scammers to reach their targets.
- You receive a call, email, text or direct message claiming you owe a debt you don't recognize.
- The supposed collector threatens to have you arrested, something the federal Consumer Financial Protection Bureau (CFPB) says legitimate collectors should not do.
- They demand immediate payment.
- They want you to pay via gift card, wire transfer or prepaid debit card. These are methods favored by scammers because they’re difficult to trace.
- Do insist on identification. Ask for the debt collector’s name, company, address, phone number and professional license number, which your state may require.
- Do demand information about the debt. Debt collectors are required by federal law to provide you with a written validation notice specifying how much you owe, the name of the original creditor and how to challenge the claim.
- Do check your credit report after you hear from a suspicious collector — if a debt isn’t listed, that may be a sign of a scam. Through the end of 2022, you can get one free credit report per week from each of the three major reporting agencies, Equifax, Experian and TransUnion.
- Do a web search on a suspicious caller’s phone number. You might find reports from other consumers that it belongs to a scam collection agency.
- Don’t give any personal data to someone who claims to be a debt collector. A legitimate collection agency would have received that information from the creditor.
- Don’t discuss the debt with someone who contacts you out of the blue. Demand that they provide the legally required written notice first.
- Don't respond to threats. By law, collectors are not allowed to harass you, threaten arrest or physical harm, or publicly reveal any debts you owe.
- Don’t make a payment you’re not sure you owe to get a collector off your back. Insist on verifying the debt claim.
- Report debt collection scams and abuse to the CFPB (online or by calling 855-411-2372), the FTC (online or by calling 877-382-4357) and your state’s attorney general.
- To get your free credit reports, go to AnnualCreditReport.com, the only federally authorized source. You can also order a report by phone at 877-322-8228. The FTC has an online fact sheet about getting credit reports.
- The CFPB's debt collection page has extensive information on collection practices and consumer rights.
Updated March 25, 2022
About the Fraud Watch Network
Whether you have been personally affected by scams or fraud or are interested in learning more, the AARP Fraud Watch Network advocates on your behalf and equips you with the knowledge you need to feel more informed and confidently spot and avoid scams.
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