Debt Collector Scams: How To Tell If a Debt Collector Is Legit

Are You Dealing With a Fake Debt Collector? 

Over the past few years, thousands of Americans paid back over $1 million in debts to the GAFS Group, Global Mediation Group, and Mediation Services. The only problem? The debts were all fake [*].

All three fraudulent companies used scare tactics to trick victims into paying for debts that weren’t real. Unfortunately, these aren’t isolated cases.

The Federal Trade Commission (FTC) received 112,827 reports of fake debt collectors in 2022 [*].

The combination of Americans taking on more debt than ever before and data leaks exposing billions of private records each year has created the perfect storm for fake debt collector scams. 

Fraudsters use stolen data — including your Social Security number (SSN), bank account number, old debts, and more — to build a convincing case as to why you should pay for a fake debt. 

In this guide, we’ll explain how to tell if you’re dealing with a debt collector scam, what to do if you’re targeted by a fake collector or debt collection company, and how to protect yourself and your family from financial fraud.

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What Are Debt Collector Scams? How Do They Work?

Debt collection scams occur when fraudsters contact victims, claim that they owe money, and threaten legal action, larger fines, or even jail time if they don’t pay. But in reality, the “debt” is fake, already forgiven, or canceled.

These scams work because fraudsters know that most of their victims have some level of debt and don’t want to ruin their credit scores if the debts are legitimate. Plus, with easy access to stolen information on the Dark Web, criminals may use your real name, personal information, or even details from old loans and debts to make their schemes seem more credible.

Here’s how debt collector scams typically play out:

• Scammers contact you and claim that you owe a debt. Most debt collection scams happen over the phone, but scammers may also reach out via texts, emails, or even visit you in person. 
• During the interaction, they use your personal information to make you feel that the debt is legitimate. Depending on your online security, scammers can find your address, maiden name, and your children’s names to embellish their script. They may also threaten to tell your family, friends, and employer about your debt — which is illegal [*].
• Next, they claim that you could face fines, arrest, or even jail time if you don’t make an immediate payment. Scammers use threats to get you to act quickly. They may even contact you again separately, claiming to be from the IRS or local police to “verify” the debt.
• If you agree to pay, they’ll ask for payments via untraceable methods such as gift cards. Fraudsters don’t want you to be able to recover any money that you send to them, and therefore ask for debit card numbers, wire transfers, or gift cards.

What Are Your Rights Under the Fair Debt Collection Practices Act (FDCPA)?

One of the easiest ways to tell if you’re dealing with a legitimate debt collector is to check if the collector is following the rules set under the FDCPA [*].

Under the act, debt collectors cannot:

• Use deceptive, unfair, or abusive practices when contacting you about credit card, mortgage, medical, or other personal debt 
• Contact you before 8 a.m. or after 9 p.m.
• Contact you at work if you’ve informed them that you can’t receive personal calls at work 
• Approach you at an unusual or inconvenient place
• Continue to contact you if you’ve requested that they stop contact or have informed them that you have an attorney representing you

The FDCPA also gives you specific rights in regard to legitimate debts. 

If collectors contact you about money that you owe, they’re required to also inform you that you can dispute the debt; and they must also provide you with information, including:

• How much you owe
• The name of the creditor
• The name and address of the original creditor (if it’s different from the current one)

How To Tell If a Debt Collector Is Legitimate: 8 Warning Signs

1. The collector or agency asks for sensitive information 
2. They won’t share their contact information with you
3. They can’t give you specifics about the debt that’s owed
4. They threaten you with fines, court orders, or larger payments
5. They say they’ll contact your family or employer if you don’t pay
6. They pressure you to pay immediately
7. They ask for payment via gift cards, prepaid cards, or similar methods
8. They call you either early or late in the day

According to a Stanford study, 12% of people who engaged with a fake debt collector lost money [*].

The best way to avoid losing money to fake debt collectors is to not engage with them and hang up right away. Here are eight warning signs that can indicate you’re dealing with a fake debt collector: 

1. The collector or agency asks for sensitive information that they should already know

Scammers commonly ask you to “confirm” your name, address, SSN, or banking details. Not only is this information that legitimate debt collectors should already know — giving it up can put you at risk of identity theft.

But even if debt collectors know your personal information, you shouldn't automatically trust them.

Scammers use stolen or publicly available information to trick you into thinking they’re legitimate. With just your name and phone number, criminals can search for your Social Security number (SSN) on the Dark Web and buy it for as little as $2 [*]. 

2. They won’t share their contact information with you

Legitimate debt collectors will provide their contact information should you have questions about your debt.

If you suspect that you’ve answered a fake call, ask the caller to provide the following information:

• Their name
• The company’s business name, address, and phone number
• Their official website and email address
• The creditor or lender’s name

3. They can’t give you specifics about the debt that’s owed 

Scammers don’t always create fake debts. In many cases, they’ll use what are known as “Zombie debts” — old debts that have been put on hold, negotiated, or discharged in cases of bankruptcy. 

Zombie debts can include:

• Debts you’ve already settled
• Unpaid debts wiped with bankruptcy
• Debts you forgot about
• Debts beyond the statute of limitations
• Fraudulent transactions that happened through identity theft

Remember, debt collectors are obligated to tell you how much you owe and to whom. Get a free copy of your credit report at AnnualCreditReport.com and review your records. If you don’t recall the debt that a caller asks you to pay, don’t pay it until you’ve done your research. 

For added protection, use a credit monitoring service to keep tabs on your credit score and alert you to any changes, new debts, or signs of fraud.

4. They threaten you with fines, court orders, or larger payments

Legitimate debt collectors are just trying to recover money. They can’t enforce any legal action and must notify you via written notice about any additional debts or fees.

If a debt collector is threatening you or demanding more than the amount owed, the person is either a scammer or not following rules set under the FDCPA. Either way, you should report them to the Consumer Financial Protection Bureau (CFPB) online or by calling (855) 411-2372. Alternatively, you can contact your state’s attorney general’s office.

5. They say they’ll contact your family or employer if you don’t pay

Some scammers threaten to go after your family members — or claim they will add your debt to your background check so that any new employer will see it. 

These are huge red flags, as debt collectors cannot disclose your debt to people other than your spouse, parents (if you’re a minor), guardian, or attorney.

If debt collectors contact your friends, colleagues, or other family members, they can only ask for basic information (such as your phone number and where you live and work). And they can also only contact these people once. 

Consider placing alerts on your bank accounts so that no money gets transferred out of your accounts without your permission (or a certified, registered court letter). 

💡 Related: How To Identify a Scammer on the Phone →

6. They pressure you to pay immediately

Fraudulent debt collectors try to get you to pay immediately to prevent you from checking their story. 

A woman in Knoxville experienced this firsthand. A scam caller claimed she owed $493 — and if she didn’t pay before the end of the day, she’d have to go to court, pay the caller’s legal fees, and additional fines up to $3,000 [*].

Remember: Debt collectors can’t harass you or use pressure tactics to get you to pay. They must send you a written validation notice within five days after they first contact you. Without that letter, you’re probably the victim of a hoax.

7. They ask for payment through gift cards, prepaid cards, or similar methods

A genuine debt collector works with you and your bank to set up a secure wire transfer. Scammers ask for alternative payment methods to avoid banks’ built-in fraud protection.

As a general rule, don’t pay anyone anything without further investigation. And always use an accredited payment method.

💡 Related: What To Do If You’ve Been Scammed Out Of Money →

8. They call you either early or late in the day

Debt collectors are prohibited from contacting you at unusual hours — they are not allowed to contact you before 8 a.m. or after 9 p.m.

Beware that phone calls are not a debt collector’s only contact option. Previously, debt collectors could only contact you by phone. But since a 2021 federal rule change, they can now reach out via email, text message, or social media direct message (DM) [*].

Whenever a debt collector contacts you, ask for a validation letter, creditor information, and the amount that you owe.

💡 Related: Scammer Phone Numbers: Avoid These Area Codes →

What To Do If You’re Contacted by a Debt Collector

You should never pay a debt collector on the spot — regardless of whether the debt is real or fake. Doing your homework to validate both the debt and collector will ensure that you’re not being exploited.

Ask for a callback number and then hang up

Never give out personal information or make payments to debt collectors that contact you until you’ve verified their legitimacy. 

Here’s what to do:

• Ask for a callback number and contact details. Ask for the collector’s name and phone number as well as the company name and street address.
• Insist that they contact you via mail. This gives you a paper trail and makes it easier to dispute fraudulent debts. If they don’t have your mailing address, don’t give it to them.
• Research the debt collection agency. Search their name and phone number online to see if anyone else has written about them. If you call back and the number isn’t in service, or someone answers with a different business name, it’s a scam.

💡 Related: How To Dispute a Credit Card Charge →

Request that the collector validate the debt 

Collectors should be able to tell you the name of the creditor and the amount that you owe.

Here’s what to do:

• Cross-check their information with your records. If it doesn’t match, hang up and call your creditor.
• Ask them to send a debt validation letter. It should include an itemized list of debts owed, along with past payment history, fees, and interest that you can corroborate with your records. A real debt collector will also include a “tear-off” form to dispute your debt or take other legal action.

💡 Related: How To Prove a Debt Isn't Yours (and Dispute It) →

Check your credit reports, and contact the original creditor

Scammers can find out if you have legitimate loans or debt and then convince you to pay them instead of your creditors.

Here’s what to do:

• Get a free credit report. Look for any recent hard inquiries, major dings to your credit score, outdated information, and records of late payments.
• Call creditors that you know are legitimate. Use numbers listed directly on their website to connect with a representative who can tell you your debt balance.

If the debt is yours: Dispute or pay it

You may incur debt from identity theft, inaccurate account statuses, ex-partners, or old accounts. To avoid payment, you’ll need to dispute the charges.

Here’s what to do:

• Write a credit dispute letter. Dispute letters can remove bad debt, eliminate reporting errors, delete fraudulent accounts, and ultimately boost your credit score. Before crafting the letter, collect all relevant account numbers, billing statements, confirmations of balance payoffs, and proof of fraud occurring in your name.
• Check your credit reports for inaccurate information. Get a copy of your credit report at AnnualCreditReport.com and examine it for mistakes related to your identity, credit balances, ownership, or account status.

If the debt isn’t yours: Report the scammer

Reporting scammers can help reporting agencies find and prosecute criminals faster. It also helps agencies develop new best practices for consumers to follow.

Here’s what to do:

• Report the scam to the FTC. File a report online and include as much information as possible. If you do recognize the debt — but collectors used profane language, repeatedly called you, or threatened to hurt you, report them to the FTC as well.
• Submit a complaint to the CFPB. Before submitting online, make sure you’re complaining about prepaid cards, payday loans, mortgages, money transfers, credit cards, student loans, vehicle loans, or other debt settlements. CFPB will share your complaint and publish information about your complaint within 15 days.
• Contact your state’s attorney general’s office. They can start a class-action case for you and other victims of debt collector fraud in your state. You can find their contact information on the National Association of Attorneys General website.

💡 Related: Is There Debt In Your Name That Isn't Yours? Here's What To Do →

Secure your identity against future fraud

Debt collection scams can be early warning signs of identity theft. If fraudsters have your personal information, they can use it to target you with other scams, break into your online accounts, or even empty your bank accounts. 

An identity theft protection solution like Aura can help keep you safe and protect you in the event that your identity is stolen. 

Here’s what you get with Aura: 

• Award-winning all-in-one protection. Aura monitors your most sensitive personal and financial information and warns you of threats. Aura’s solution has been rated #1 by Money.com, Forbes, Security.org, and more.
• Three-bureau credit monitoring with the fastest fraud alerts. Speed matters when it comes to dealing with fraud. Aura monitors your credit file at all three bureaus (TransUnion, Equifax, and Experian), as well as your bank and investment accounts — and warns you in near real-time of suspicious activity up to 250x faster than other providers.
• Proactive digital security to protect you from hackers. Aura also safeguards your devices, data, and networks from hackers. Every Aura account comes with antivirus software, a military-grade virtual private network (VPN), a robust password manager, Safe Browsing tools to protect against phishing attacks, and more. 
• $1 million in identity theft insurance. If the worst should happen, every Aura member is covered for up to $1 million in eligible losses due to identity theft. 
• 24/7 access to U.S.-based Fraud Resolution Specialists. Whether you have questions, were targeted by a scammer, or need help, Aura’s dedicated support team is always available. 
• Dark Web monitoring, data broker opt out, and more. Read the full list of Aura features here. 

Did You Give a Fake Debt Collector Money? Do This!

• Document what happened. Write down the scammer’s phone number and anything else you can remember from the conversation, such as websites or contact information. Take screenshots of any texts, WhatsApp, or Facebook messages, too — as scammers may be clever enough to delete them.
• Freeze your credit. When you’ve activated a freeze, no one can open new lines of credit in your name. To freeze your credit, you’ll need to contact each of the three major credit bureaus individuals — TransUnion (online, or call 1-888-909-8872), Equifax (online, or call 1-800-349-9960), and Experian (online, or call 1-888-397-3742).
• Contact law enforcement and share all of your documentation. They can file a case and give you the paperwork that you need to verify you’ve been the victim of a scam — which vendors, banks, or credit card companies may ask for.
• Report the scam to the FTC at ReportFraud.ftc.gov. An official FTC report helps shut down scammers and can also be useful when disputing fraudulent charges.
• Contact your banks, credit card companies, and vendors. Explain what happened and provide any paperwork that you received from the police or FTC. Ask each party for a certified letter stating that you’re not liable for any gift card or prepaid card purchases you made as a result of the scam, and that they’ve removed the fraudulent charges.
• Review your insurance coverage. If you’ve given away sensitive information along with your payment, you can become the victim of identity theft. Contact your identity theft insurance provider to see if your coverage can help you recover losses, including sensitive documents like driver's licenses and passports.

The Bottom Line: Don’t Get Scammed Into Paying Fake Debts

Fake debt collection calls and scams are becoming more convincing — putting hundreds of thousands of Americans at risk. And these threats are not stopping any time soon.

Understanding your rights and recognizing the telltale signs of a fake debt collection scam can protect you and your family from predators. But mistakes can still happen. Aura’s automated threat detection system and insurance coverage can give you peace of mind and adequate protection in a security emergency.

And should you become the victim of identity theft, Aura’s $1 million insurance policy and 24/7 U.S.-based Fraud Resolution Specialists will help you limit the damage that fraudsters can do.

Don’t lose money (or sleep) over scammers. Try Aura free for 14 days.