A phantom debt collection scam happens when a consumer receives a call from a “debt collector” saying they owe money for a debt that hasn’t been paid, however, there is not money owed. These scams come in numerous variations, but usually the central theme remains the same. The caller will tell the consumer to pay or face serious consequences, such as but not limited to, fines, collections, garnishments, or even jail time. Regardless of whether the consumer has actually taken out a loan with the supposed company the “debt collector” is representing, they may still receive a phone call stating that they owe money. These scams often begin when a consumer goes online seeking to get a payday or internet loan. The website they visit may or may not belong to a reputable lender. The consumer may be directed to call a phone number to verify information in order to receive funds. That information could be given to a scammer for later use in a phantom debt collection. While there are a lot of legitimate lenders online, it is extremely important to research and do your due diligence before talking to a company to receive a loan. Fraudsters know and take advantage of the fact that often times when someone is looking for a payday loan, they are financially strapped and need funds quickly.
Even if the consumer just applied for a loan but didn’t actually take it out, these con artists can make them believe they owe a debt. They can be so threatening and convincing that the consumer truly believes they owe money and will hand over payment information to make any consequences go away. Some fraudsters are so good they make people wonder if someone else has taken out loans in their name. In cases where the person does have an outstanding loan, the scammer can make them believe they owe more in fees and interest than they actually do. Some cases, the victim of the phantom debt collection scam may be behind on a legitimate loan, but the caller does not have the authority to collect any debt. No matter a person’s actual situation, skilled con artists can convince them to hand over money to settle their “debt”. As with other scams, payment is often demanded via gift card, wire transfer, or debit/credit card, and the scammers use scare tactics to demand immediate payment.
Here are some tips to avoid falling for a phantom debt collector:
- If a caller ever asks you to pay via wire, debit/credit card, gift card, or your routing and account number over the phone HANG UP! This is almost always a scam.
- Be wary when applying online for payday or short-term loans. You are placing your personal information at risk, not to mention that the fees and interest rates associated with these loans are usually astronomical.
- If you receive a call about a debt, you owe but aren’t sure if it is legit, ask the caller to only contact you by mail and have them send you proof of the debt in question. The Fair Debt Collection Practices Act requires debt collectors to stop calling consumers if they are asked to do so.
- If you receive a call from someone claiming to be a government agency and says you owe them money for a debt, hang up and call the organization they claimed to be from directly.
- If you are unsure if you are delinquent on any loan, contact your lender directly.
- Look up numbers or email addresses or rely on your loan agreements to find contact information.
- If you receive a call from a Phantom Debt Collector, it is very possible that your credit and personal information may have been compromised resulting in possible identity theft. The Federal Trade Commission offers a step-by-step process for recovering from identity theft.
If you or someone you know has already been a victim of this crime, please contact law enforcement. Remember, if you can spot a scam you can stop a scam.