How To Avoid Being Confused With Debt Collection Scams

As a legitimate debt collector, the last thing you want is to be compared to scammers who use underhanded tactics to pressure people into making debt payments that they do not actually owe. There seems to be an endless number of these false debt collectors, and it is important for honest debt collectors to differentiate themselves from them.

The Better Business Bureau recently released a Scam Alert describing a phony debt collection scam. The scam artists described in the report are apparently calling random people and claiming to be FBI Agents. Somehow these scammers are obtaining personal information about their victims and are then using that information to convince the victims that the FBI is monitoring their activity.

The Scam Alert breaks down four different red flags that potential victims should be on the lookout for. As legitimate debt collectors, we will want to avoid each of these practices so that there is absolutely no reason for debtors to suspect that there is anything fraudulent about our debt recovery process.

Many of these concepts are simple common sense, but following them could make your collection a lot easier to complete:

Wire Transfers & Prepaid Debit Cards 

One of the tactics that the scam artists are using is insisting on payments through direct wire transfers and prepaid debit cards. These payment methods are completely non-refundable, so the victims are left with no recourse after they realize that they have been scammed.

As legitimate debt collectors, we have no reason to be concerned with having to return a payment to the debtor. Therefore, we should make it as easy as possible for a debtor to make payments. Accepting credit and debit cards online or over the phone is no problem for collecting honest debts.

Making Threats 

The fake FBI agents that the BBB describes are threatening their victims with legal action and going to jail. While these threats are completely empty, they can sound very intimidating over the phone. The BBB advises anyone who is threatened by a debt collector to hang up immediately and call the police.

Regardless of what country or state you are collecting in, it is almost certainly against the law to threaten your debtors in any manner. While that does not stop scam artists from making threats, there is no reason for you to stoop to that level in your legitimate debt collection.

Misrepresenting Yourself 

Obviously, the major issue here is that the scam artists are misrepresenting themselves as FBI agents. The alert specifies that the calls are showing up as “Federal Investigations” on many victims’ caller IDs.

Much like threatening debtors, it is probably illegal to misrepresent yourself to a debtor regardless of where you are collecting. Almost every state requires you to clearly and accurately identify yourself when making collection calls. If you collect debt in California, the laws are even more specific with respect to identifying yourself properly.

Providing Documentation 

The Scam Alert also advises victims to require the debt collector to provide information about the debt in writing. This is obviously difficult for a scammer who is collecting a false debt to provide. However, legitimate debt collectors should be able to provide this documentation easily.

Since we are aware that debtors are being advised to ask for this information, it is in our best interest to be prepared and have it ready for them. Before you even make the collection call, you should have all of the necessary information ready to go so that you can fax, email, or mail it to the debtor at their request.

In the debt collection world, it is in the collector’s best interest to do everything in their power to make the process go as smooth as possible. Avoiding these four red flags could do just that and help you collect the amount owed sooner rather than later.

By | 2017-09-16T13:04:34+00:00 March 5th, 2014|Blog|0 Comments

About the Author:

Graduated from University of Utah - business degree 1990. Served in US Army as an interrogator / linguist, then as a tactical intelligence officer - Military Intelligence 1986-1990. Managed Western US sales operations for NY based collection agency 1990-1992. Founded Direct Recovery Associates, Inc. 1992-present