Last week, the Federal Trade Commission (FTC) issued its annual summary of activities regarding debt collection. Debt collection scams are common and one of the most devious debt collection scams is what is called “phantom debt collection” which is when scammers attempt to collect on non-existent debts. The FTC’s report highlighted its efforts against phantom debt collectors.
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. Last year, the Federal Trade Commission (FTC) initiated Operation Corrupt Collector a joint action by the FTC and state authorities to shut down illegal debt collectors. Last year the FTC brought charges against numerous debt collection scammers including two companies that robocalls to threaten lawsuits if the people they called did not pay non-existent debts. In these cases the companies falsely claimed either to be law enforcement officers or attorneys threatening their victims with arrest and imprisonment as well as the loss of their drivers licenses.
Subject to strict federal laws, legitimate debt collectors are permitted to call debtors, however, the law prohibits them from threatening imprisonment for the failure to pay a debt and attempting to collect a debt that the debt collector knows is bogus. It can be difficult to know when someone calls attempting to collect a debt if indeed they are legitimate or not, so your best course of action if you receive such a call is to not discuss the debt with the person calling, but instead demand that they send you a written “validation notice” by regular mail which describes the debt they allege you owe and includes a listing of your rights under the Federal Fair Debt Collection Practices Act. Never give personal information over the phone to anyone who calls you attempting to collect a debt. You can never be sure who they are. You also can check your credit report at each of the three credit reporting agencies, Equifax, Experian and TransUnion to see if any debts which you are not aware of appear on your credit reports. If you receive the validation notice and it appears to be legitimate, you may be better off contacting your creditor directly because the person who called you may not be representing the creditor, but may merely have information about the debt.
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