Debt Collection Scams
No one likes to be contacted by a debt collector. This situation can be difficult enough for those who actually owe money, but it can be troubling and shocking if you don’t recognize the debts or the creditor mentioned. You may wonder if you have been the target of identity theft or if there is some error.
The person on the other end of the phone line or chat may pressure you for information or compliance, but you must ask questions and ensure these questions are answered. People have rights and this holds true even if they owe money. To deal with debt collection scams, it is important to know how to recognize them and what to do.
Broker Complaint Registry is the right place to turn if you are the target of a debt collection scam. We consult with clients and refer them to experts who can pursue their case in detail and work to investigate the broker or scam, and in many cases, succeed in fund recovery. Talk to us today, and we can guide how to deal with the claim.
What Are Debt Collection Scams?
From the financial crisis of 2008 to the more recent economic upheavals caused by COVID-19, indebtedness is a chronic problem in many countries. The availability of easy credit and the extreme consumerist aspect of our daily life as we are bombarded by literally thousands of ads a day can cause people to spend beyond their means.
Added to this problem is the disappearance of steady jobs, the rise of the gig economy, and the reliance on side hustles to get by. It is not surprising many people are spending more than they are making and end up with debt problems. The prevalence of debt has given rise to debt collection scams, which like forex trading scams and crypto scams cost consumers millions every year.
Many people know what it is like to have an unexpected debt pop up that they hadn’t noticed before. This uncertainty about finances is what debt collection scams rely on. They will call, text, or email a victim and claim that they owe money and they are contacting them on behalf of creditors.
They may not reveal details about the debt or the creditor but will demand immediate payment of the debt. The scammers may pretend to be from a government agency or a private debt collection service. They may ask for the payment through unconventional ways, such as bitcoin or a gift card. This is to prevent the payment from being traced.
Like forex scams and bitcoin scams, those who perpetrate these actions choose their victims wisely. They may have purchased or stolen a list of names and contact information of people who owe money or apply for scam loans. Many of the people who run debt collection scams are also involved in fraudulent lending and they recycle their lists.
Why Debt Collection Scams Often Work?
We can understand how debt collection scams work but often it is just as important to understand why they work. Several factors unfortunately make these fraudsters successful at their illegal activities:
- Disorganized personal finances
- The tendency of debtors to either avoid the problem or overreact
- Anxiety over the situation may lead to a hasty response
- Haste may lead to targets not asking the right questions
- Lack of knowledge about the legal requirements of the debt collection process
Those who owe money tend to have similarities with each other and follow certain patterns that debt collection scammers tend to rely on. One is disorganized finances. With eCommerce online payments, it is easy to lose track of what we spend. That makes it easy for debt collection scammers to spring a “forgotten” debt on someone even if it is only invented.
Debt collection frauds work by phishing information about people who owe money. Debtors have some habits that tend to keep themselves in debt and can be predicted by these scammers.
For instance, they may be so overwhelmed with debt that they may choose to ignore the problem until it grows to a crisis level. Then when the crisis happens, they remove it as quickly as possible by coming up with the money somehow, perhaps through extra borrowing and paying off the creditor.
Debt collection scams provide the threat and rely on the debtor paying them off quickly before asking questions. This is why they threaten repossession or jail time, even though these may be unlikely at such an early stage. The victim will feel so anxious that they will find any way to give the money to the fraudster to avoid a crisis.
The reality is that there are laws governing debt collection. The debt collection agency must identify themselves, the creditor and give the debtor time to respond. Extreme penalties like repossession are only done after some time. If you have been contacted by a debt collector, do the following:
- Do not give them any information immediately
- Contact them through their contact information, such as phone or website to confirm their claim is correct
- Ask for the name of the creditor and contact the creditor directly
- Check your financial records to verify what they are saying
- If you are a debtor do some research and know your rights
Only after you have confirmed all of the information should you pay in response to a claim by a debt collector. It is important to take the time, look through your records, and talk to the agency directly. If they can’t be contacted or if the information is inconsistent, it is likely a debt collection scam.
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