Receiving a telephone call from a debt collector is not a pleasant experience. Being hounded by someone attempting to collect a debt you do not owe is fraud. I have written many times in the past about scammers who use deceptive and abusive collections practices in attempting to collect non-existent debts.  These scammers violate the Fair Debt Collection Practices Act by making threatening and verbally abusive phone calls, contacting third parties about the  phony debts, threatening legal action and attempting to collect debts that the scammers knew were not owed.  Recently the Federal Trade Commission (FTC) settled a lawsuit it had brought against Midwest Recovery Systems, a company which had been practicing “debt parking” which is the name for putting fake or questionable debts on people’s credit reports without notifying the person.  According to Andrew Smith of the FTC, “The defendants parked fake or questionable debrts on people’s credit reports and then waited for them to notice the damage when they were trying to get a loan or a job.  The defendants used this illegal ‘debt parking’ to coerce people to pay debts they didn’t owe or didn’t recognize.”

In one instance, when a victim of this scam applied for a mortgage he found a $1,500 outstanding medical debt on his credit report placed there by Midwest Recovery.  This debt lowered his credit score and threatened to derail his mortgage application.  When the consumer contacted the hospital where the debt was owed, he found that all that he owed was a $80 co-pay which he promptly paid, however, Midwest Recovery refused to remove the $1,500 debt from his credi report unless he paid the entire $1,500 and threatened the consumer with a lawsuit if he didn’t pay.


The best way to protect yourself from “debt parking” is to regularly check your credit report at each of the three credit reporting agencies to see if any debts which you are not aware of appear on your credit reports so that you do not get blindsided when you are applying for a loan and suddenly find a problem that may take time to recitfy.   It is important to check your credit report at all three credit reporting agencies, Equifax, Experian and TransUnion because each of them independently creates a file for you and although their files are quite similar, they are not identical.   Formerly you were able to get one free credit report per year from each of the three major credit reporting agencies, however, as a concession to people during the pandemic, Equifax, Experian and TransUnion have agreed to provide free credit reports on a weekly basis.  The website to go to get your free credit reports is  Be sure you use this website because there a lot of phony websites that purport to provide you with free credit reports that charge hidden fees.  If you do find a debt of which you were unaware placed there by a collection agency, you may be better off contacting your creditor directly because the collection agency may not be representing the creditor, but may merely have information about the debt.

For those of you receiving the Scam of the day through an email, I just want to remind you that if you want to see the ever increasing list of Coronavirus scams go to the first page of the website and click on the tab at the top of the page that indicates “Coronavirus Scams.”  Scamicide has been cited by the New York Times as one of three top sources for information about Coronavirus related scams.

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