Is That a Debt Collector Calling… or a Scammer? 3 Shrewd Ways to Find Out

Hands holding phone and credit card
megaflopp/Getty Images

Your phone rings, and it’s a number you don’t recognize. Against your better judgment, you answer.

On the line is someone who says they are calling from a debt collection agency. You owe money from an unpaid parking ticket. Or maybe an old medical bill. Possibly even that Old Navy card you maxed out buying all the cargo shorts you could get your hands on when you were in college.

The person is telling you it’s time to pay up, and they can take your bank information to settle the debt right now over the phone.

There’s only one problem: You’re not sure if handing over your information will really clear you of the old debt — or if you would actually be playing right into the hands of a scammer.

This dilemma is so widespread that it’s on the radar of the Consumer Financial Protection Bureau. A new report provides a snapshot of the most common concerns among the 400,500 debt collection complaints consumers sent to the bureau since 2011.

Other common themes in the complaints included:

  • Debt appearing on consumers’ credit reports before they got written notice.
  • Debt collectors continuing calls after a borrower requested not to be contacted by phone.
  • Debt collectors withholding information about the debt.
  • Calls at odd hours.

What to Do When a Debt Collector Calls

With the number of scam calls we all get each month, no one wants to inadvertently aid a criminal while repairing their finances.

To help you navigate debt collector calls, we talked to Bruce McClary with the National Foundation for Credit Counseling (NFCC), a financial counseling nonprofit.

Before joining the NFCC, McClary worked as a debt collector. He’s got some ideas for how you can settle your debt without exposing yourself to a savvy scammer.

1. Don’t Pay Over the Phone

There are few circumstances when paying over the phone is the only option.

According to McClary, a legitimate debt collection agency should give you at least a few days to look into the company’s credentials and the debt its employees claim you owe before you make a payment.

“There are very few situations where if you ask for enough time to validate what they’re saying that it would end up putting you in a situation where it’s too late,” McClary said. “If they can’t wait one or two days or even a week, I’d be very surprised.”

Once you’ve taken that time, you can pay over the phone if you’d like, but McClary still recommends paying online on a secure website. That ensures you will get a receipt to prove you made the payment. If you opt for a phone payment, make sure to ask the company to send you a record of the payment as soon as possible.

2. Ask for Proof That You Owe the Debt

“You have a right to ask for proof that the debt is legitimately yours,” McClary said. “And you want to get the proof in writing. Don’t just take their word for it over the phone. You want full documentation.”

Do this even if you think the debt sounds legitimate, McClary suggested. You want to know for sure before you pay.

McClary says any debt collector is required to send you enough information in writing to prove the debt is yours and that the company has the right to collect it. The information you can request includes your name, how long you’ve had the outstanding debt, how much you owe, the origin of the account and proof that the debt collector is authorized to take your money.

3. Don’t Forget to Get the Name of the Collection Company

Make sure you also get the name of the third-party collection agency asking for the payment so you can make sure it is licensed to collect money.

For now, you can check the standing of a company through the Consumer Financial Protection Bureau’s public complaint database. This may not be public forever, but for now it is. This database will let you know if the government has taken any complaints or recent action against the company collecting your debt, McClary said.

If the company doesn’t exist in the CFPB database, you’ll be able to continue the search on Google.

“That gives you the opportunity to investigate them to make sure they are a legitimate operation,” McClary said. “You can look them up to make sure they are licensed and that they are recognized as an actual debt collection agency.”

McClary recommends searching for the company online to find out where it is headquartered, and then checking with that state’s government to make sure the company has the appropriate license to collect debt.

Taking an extra few days to verify this can save you a truckload of money you could have lost to a scammer.

Desiree Stennett (@desi_stennett) is a senior writer at The Penny Hoarder. She writes about how government and court actions impact your wallet.