How the Scam Works:
You receive an automated call. It’s from a company claiming to be collecting payment for a cash advance. The recording prompts you to stay on the line and speak to an agent.
Don’t do it! These calls often turn threatening. The “agent” will request you pay your debt immediately using a wire transfer or prepaid debit card. If you refuse, the “debt collector” will try to intimidate you. Targets report being threatened with arrest, lawsuits or garnished wages.
Despite the threats, these phony collection agents don’t have any legal power. In most cases, the alleged cash advance doesn’t exist.
Protect Yourself from Debt Collector Cons:
To keep yourself protected against debt collector scams know your rights.
- Just hang up: If you don’t have any outstanding loans, hang up. Don’t press any numbers or speak to an “agent.”
- Ask the debt collector to provide official “validation notice” of the debt. In the US and most of Canada, debt collectors are required by law to provide the information in writing. The notice must include the amount of the debt, the name of the creditor and a statement of your rights. If the self-proclaimed collector won’t provide the information, hang up.
- Ask the caller for his/her name, company, street address, and telephone number. Then, confirm that the collection agency is real.
- Do not provide or confirm bank account, credit card or other personal information over the phone until you have verified the call.
- Check your credit report. In the US, check with one of the three national credit reporting companies (Equifax, TransUnion, Experian). In Canada, check with Equifax Canada. This will help you determine if you have outstanding debts or if there has been suspicious activity.
- Place a fraud alert on your credit report. If the scammer has personal information, place a fraud alert with the three national credit reporting companies.
For more information
Check out this recent alert about cash advance collections scam from the Washington State Department of Financial Institutions.
Also, read this article from the Federal Trade Commission about dealing with fake debt collectors.
To report a scam, go to BBB Scam Tracker.