Protecting Yourself from Debt Fraud

Debt fraud is a real problem in America. Many think that it doesn’t happen: assuming that no one is dumb enough to fall for it. And yet it happens every day, making scammers richer on dishonest work.

Scammers learned a long time ago that people are generally an extremely trusting species. If you can walk into a place like you own it, many just assume that you do. Hence, if a scammer can call you up on the phone, pretend like you owe them money and demand payment, some will actually pay up.

That’s surprising right? Without ever verifying who the debtor was or what the money was for, people respond with a check if the scammer can throw enough fear into the situation. As Diana Mey found out though, keeping a cool head can keep you safe.

Back in 2010, Mey received voicemails from a debt purchasing company telling her that they would seize her house if she didn’t pay back a debt she supposedly owed. Mey knew she didn’t have any debt against her home and sent a cease-and-desist letter to the company. Soon after that, she received continual hang-up calls from “the local sheriff’s department.” In one instance, she answered too quickly and got an ear full of swearing and sexual assault threats.

It’s legal to record calls in her home state, and so she had this call for proof. She brought forth the evidence against the company and called them to court. Their lawyer never showed. The judge awarded her $10.8 million for her troubles.

Since then, over 1,000 complaints have come out of the wood work against this company. The company garnished enough attention for the Federal Trade Commission to raid the property, sue it, and freeze all of its assets. After examining records, they discovered that this company had scammed approximately $140 million from people between 2009 and 2013.

That means a lot of people were driven to pay a debt they never owed. The reality of that drives home the importance of keeping track of all debts you may owe and investigating any agency that pretends you owe them money. A call filled with threats isn’t enough. Nor is it professional.

How can you investigate the legitimacy of a claim? Well here are ways given by the Federal Trade Commission to figure out if they are sketchy.

First, double check the claim. Ask them what you owe for. Check your records to see if (1) you ever borrowed the money you claim they did, and (2) you have records showing you completely paid off that debt or not. Both are good signs of legitimacy. If you have paid off the debt, get on the phone with the company you borrowed money from and get it cleared up with them.

Second, ask them for a mailing address or phone number. As both of these things can be traced back to owners of property or phones, they will be unwilling to hand over that information. If they do give it out, do a quick Google search for the address and phone. Check to see they are attached to the agency name and a website. If they’re not, question. If they are, then move onto the next step. Using the street view of Google maps, check out the address. Is it in a residential neighborhood? Is it in a business complex? Is it an empty lot? These are all clues as to the legitimacy of the company.

Third, are they asking you for personal financial or other sensitive information right away? Fake debt collectors pressure you into giving them your personal information. Read debt collectors don’t do that. And they certainly don’t need your social security number or other extremely personal information. This is a warning sign.

Fourth, the agency is exerting a lot of pressure on you. As said before, these scams thrive off of fear. Fear makes people think less coherently. Threats for arrest, seizure, or reports are common. Although these are real consequences of failure to pay a debt, they are not professional tactics. If you feel excessive pressure or threat, be very cautious of them.
If things aren’t adding up, don’t talk to them anymore, send a cease-and-desist letter (making a copy for yourself), investigate the issue with your creditor, and report it if things just aren’t adding up.

The Federal Trade Commission has seen the sad trend time and time again and they want to stop it. They want to encourage people to follow examples like Mey. Protect yourself from future fraudulent attacks by (1) knowing your current debt situation well, (2) being skeptical of debt collectors applying phone pressure, and (3) report suspicious activity so they can get to the bottom of the issue.

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