A couple of weeks ago, I was sitting in my office when my personal cell phone rang. The caller ID showed an unknown number. Despite my initial thoughts to let the call go through to voicemail, I answered. I was immediately greeted by the unmistakable clicking sounds of an automatic dialer trying to connect me to a phone in a call center. After a couple of seconds, a voice came on the other end. He identified himself as an agent of the Federal Bureau of Investigation (FBI) and said he was calling because my name had been flagged for credit card fraud over a debt he claimed I owed. He said I needed to make payment arrangements immediately because: (1) a criminal case had already been filed against me for fraud; (2) the sheriff was reviewing a warrant for my arrest as we spoke; and (3) only immediate payment could stop my imminent arrest and a lengthy prison sentence. The caller even cited to what he claimed were federal criminal statutes to back up his claims.
Fortunately, I’m an attorney and am familiar with consumer debt collection practices, so I immediately recognized this call as a scam. I hung up on the would-be FBI agent before he could waste any more of my time. Below are some tips on how to determine if a collections call is legitimate and what you can do if it is.
Tip 1: Don’t panic.
It can be very stressful to get a phone call from someone claiming that you owe them money on a past debt – especially if they are making threats. Fake debt collection scam calls are a massive business that costs consumers millions of dollars a year. Most of these calls are highly aggressive and threaten lawsuits, arrest, jail time, and in some of the more extreme cases violence against you or a family member unless immediate payment is made. Additionally, there are legitimate collection agencies that are collecting on consumer debt that is rightfully owed that sometimes become overly aggressive when collecting on these debts. It is important not to panic when getting a call like this as there are legal protections available in the United States against such abusive practices.
The federal Fair Debt Collections Practices Act, or “FDCPA,” which is found in the United States Code, Title 15, Sections 1692-1692p, was designed to eliminate abusive, deceptive, and unfair debt collection practices. Most states have also enacted state laws providing consumers living in those states with additional protections from abuse in debt collections. The federal Consumer Financial Protection Bureau has been granted rulemaking authority under the FDCPA and authority to supervise and enforce compliance with the FDCPA. The FDCPA also allows a consumer to sue in court for abusive practices.
Tip 2: Determine who you are dealing with and what type of debt is being collected.
The first thing I recommend when you get a collections call is to determine who you are dealing with and what type of debt they are collecting. The FDCPA applies to “debt collectors,” defined to include “any person who . . . regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” An institution is not a debt collector under the FDCPA when it collects: another’s debts in isolated instances (usually this is law firms who do some collections cases for third-party collection agencies, but it is not a large part of their business); its own debts it originated under its own name; debts it originated and then sold, but which it continues to service (for example, mortgage and student loans); debts that were not in default when they were obtained; debts that were obtained as a security for a commercial credit transaction (for example, accounts receivable financing); debts regularly collected for other institutions to which it is related by common ownership or corporate control; and a few other exceptions that rarely come up. Additionally, the FDCPA only applies to the collection of debt incurred by a consumer primarily for personal, family, or household purposes. It does not apply to the collection of corporate debt or to debt owed for business or agricultural purposes
A reputable collection agency will clearly identify who they are and why they are calling you. The collector should have access to enough information to tell you who the original creditor was and what the amount of the debt is claimed to be. If you are dealing with the original creditor, they should be able to provide you with even more information to help you determine the nature of the debt. A good collection agency may ask a few questions to verify your identity, to make sure they are talking with the right person. Do not give any personal information such as your social security number, date of birth, or other personal information to them. Instead, ask them to tell you what they have and then verify that their information is correct. This can help weed out scam artists looking to commit identity fraud. If this is a debt that you recognize and think you may owe, I do not recommend making payment just yet. Instead, I recommend that you ask for the name and contact information of the collection agency and proceed to my next tip.
Tip 3. Request validation of the debt.
Under the FDCPA, a debt collector must provide the consumer with certain basic information. If that information was not in the initial communication and if the consumer has not paid the debt five days after the initial communication, the following information must be sent to the consumer in written form: (1) the amount of the debt; (2) the name of the creditor to whom the debt is owed; (3) notice that the consumer has 30 days to dispute the debt before it is assumed to be valid; (4) notice that upon such written dispute, the debt collector will send the consumer a verification of the debt or a copy of any judgment; and (5) if, within the 30-day period, the consumer makes a written request for the name and address of the original creditor, if it is different from the current creditor, the debt collector will provide that information.
If you do not recognize the debt or think you may have already paid it, it is critical that you dispute the debt in writing within 30 days after receiving the initial communications from the debt collector. Otherwise, the debt collector can assume that the debt is valid and proceed with collection efforts against you. Regarding validation of the debt, there is a lot of bad advice on the internet as to what constitutes a debt collector properly verifying a debt. In my career, I have received validation request letters demanding all sorts of information from a complete accounting of the debt, to demands of my own personal information – none of which is required under the FDCPA. All the FDCPA requires of a debt collector when a dispute is received is the name and address of the original creditor, a copy of any judgment related to the debt, the balanced owed, and the name of the person who owes the debt. However, a debt collector must stop all collections efforts from the time a dispute is received until they provide the verification. This can be invaluable to a consumer who may need time to do their own research on the debt, gather funds to pay the debt off, strategize a payment plan, or file for bankruptcy. Once you have determined whether this is your debt and you have not paid it, you can proceed to pay or attempt to negotiate with the debt collector. Most reputable debt collectors will work with you in the form of payment plans or reduced amounts.
Tip 4. The overly aggressive collector or the scam artist.
Regarding the telephone call I received mentioned above, there were several clear warning signs that alerted me to the fact that it was a scam. The FDCPA provides consumers protections against abusive practices. In my case, the “collector” committed multiple violations of the FDCPA by falsely alleging that I had committed a crime, falsely representing or implying that nonpayment of my alleged debt would result in my arrest and imprisonment, and falsely representing or implying that the collector I was talking to was vouched for, bonded by, or affiliated with the United States or any state (in my case, the “collector” claimed to be an agent with the FBI).
While my personal experience was clearly a scam artist attempting to scare me into paying money I didn’t owe, there are instances where collection agencies attempting to collect on a legitimate debt cross the line and commit violations of the FDCPA. Examples include: the use of obscene, profane, or other language that abuses the hearer or reader; harassing the consumer by repeatedly calling their telephone number or allowing their telephones to ring continually; falsely representing that the collector is an attorney or that communications are from an attorney; threatening to take any action which is not legal or intended; and the use of false representation or deceptive means to collect or attempt to collect a debt or to obtain information about a consumer.
If you run into any of these situations with a collector, whether the debt is legitimate or not, I recommend consulting an attorney, as the FDCPA provides civil penalties against debt collectors who fail to comply with the FDCPA. Additionally, most states have enacted their own consumer protection acts that provide additional protections for consumers against unfair debt collection practices.
I should also note that no legitimate debt collector or government agency in the United States will demand payment in the form of gift cards. If you receive a call from a debt collector who instructs you to go to the store to purchase large amounts of Google Play or Apple cards and read them the numbers, it is 100% a scam. Please hang up your phone and call the police to report this.
Tip 5. Payment
Once you have determined that you are working with a legitimate debt collector and have verified that the debt is yours and you would like to make payment, here is some parting advice: make sure you get a receipt in writing, along with dismissal/satisfaction documents of any legal proceedings that may have been initiated against you. Keep these safe. Sometimes a debt gets sold to multiple collections agencies. If you get contacted about the same debt after you have paid it off, you will need to send the receipt to the debt collector to prove that the debt has been paid off.
I have only covered a small fraction of the FDCPA and collections laws. For additional resources, I recommend going to the CFPB’s website at consumerfinance.gov. There you will find the complete FDCPA, letter templates for dealing with a debt collector, instructions on how to file a complaint with the CFPB against abusive debt collectors, and other consumer resources.