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Debt collectors: How to recognize scams

Sep 11, 2014 Philip Burgess

When scammers participate in almost any industry, it can have adverse effects on the legitimate operators who are just trying to make a decent living in the sector. For example, think of the retail realm. If a massive cyberattack occurs at a formerly reliable, respectable corporation, consumers might become wary. After all, if the big guys can be left vulnerable, anyone can, right? So, a shopper might think twice about entering his or her sensitive financial information into fields on the e-commerce websites of any business, thereby negatively affecting many other enterprises.

This is something that debt collectors have to face often. The reputation of the entire industry can take quite a turn if a recovery scam is uncovered, something that criminals seem to have taken to attempting recently.

Collection agents need to act as the first line of defense against scammers who work to sully the name of the industry. Efforts need to include more than just following best practices and hoping that consumers will see the significant value the sector brings to the economy. Debt collectors need to be aware of what a scam looks like so they can take next steps and warn consumers. Letting individuals know what's going on can not only protect people, but also show the public that legitimate professionals are willing to lend a hand and work with clients.

So, what are some dead giveaways that a scam is afoot?

Questionable language


If there have been reports of consumers being contacted by an individual claiming to be a debt collector, and subsequent conversation has involved threats of arrest, harassment and promises of other serious punishments, chances are a scammer is on the other end of the line. As all recovery agents know, those in the industry have to stick strictly to the Fair Debt Collection Practices Act when conversing with the public. This concerns what can and cannot be said during phone calls and other communications.

Between that regulation and case law that has resulted from various lawsuits over time, professionals know well what these conversations should sound like. It's abundantly clear that no language can be threatening and false promises - like the threat that the debtor will be jailed if an account goes unpaid - cannot creep into a dialog.

Asking about wire transfers
Legitimate debt collection workers usually require payments to be made via check, while others have expanded to e-commerce. Wire transfers, however, are not an acceptable means of payment at almost any agency.

As such, Credit.com pointed out, if a debt collector has been asking members of the general public to amend accounts by transferring money over a wire, this is almost certainly the mark of a criminal. The source explained that many scammers now ask for transfers because they're directly given the money and the consumer has almost no way to get it back or trace the recipient. Moreover, some fake collectors ask debtors to load the sum of the money owed onto a prepaid card, then read the card number over the phone.

House calls
Debt collection agents typically get in touch with consumers in two ways - they send a letter informing the person about the debt and they call them on the phone. They do not make house calls, nor do they send police officers in their stead to do so. This situation recently occurred in Dayton, Ohio, according to WHIO-TV. The source reported that two criminals dressed as a police officer and a lawyer or state investigator went to a local woman's home to attempt to collect on an alleged debt - even armed with correct consumer and bank account information.

As Montgomery Country Prosecutor Mat Heck told the media outlet, police officers and public officials never make home visits to help amend a debt.

So, what's next?
If they hear rumblings that a scam is occurring, debt recovery agents need to take the appropriate steps to report it to the authorities. The police must be involved, as does the Consumer Financial Protection Bureau. This can help catch the perpetrators before they do damage, or at least before a large population is affected. Taking scammers out of the equation can help boost the industry's reputation in the long run.