Avoiding Debt Collection Fraud

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Howard Schwartz of the Connecticut Better Business Bureau talks about how to avoid fraudulent debt collection schemes.

Below is a press release from the Connecticut Better Business Bureau about the debt collection scams. Visit ct.bbb.org for more information.

“Wallingford, CT – September 30, 2013 – Connecticut Better Business Bureau is alerting consumers to persistent debt collection scams and debt collectors who use illegal tactics to obtain payment.

The Federal Trade Commission (FTC) reports it has more consumer complaints about debt collectors than any other type of business, and Better Business Bureau continues to see a steady rise in complaints as well.

There is a wide array of outright debt collection scams, which can frighten consumers into paying money they don’t even owe.  The issue is complicated by calls from legitimate debt collectors who use methods that are forbidden by the Fair Debt Collection Practices Act, such as making harassing phone calls and threats, calling family members, friends, colleagues and employers to try and shame debtors into paying and warning consumers they will have them arrested unless they pay.

In addition, if a consumer gives out personal information to someone who claims to be a debt collector, they are at risk of becoming a victim of identity theft.

There are several red flags associated with debt collection scams, including:

  • Demanding payment for a loan you don’t recognize
  • Refusal to provide proof of the debt or contact information
  • Persistent requests to hand over personal information
  • High pressure tactics designed to scare you, by saying that you could get into legal trouble by not paying immediately

The Fair Debt Collection Practices Act protects consumers from debt collector harassment.  You may demand a “validation notice,” which is a written notice of the amount of debt and the creditor.

The ACT also allows you to put an end to debt collector phone calls to your home and work by sending a letter to the collector demanding they stop contacting you.  This does not, however, eliminate a legitimate debt.  The collector still can sue you for the debt, but you also may sue if the company continues to harass you.

If you are contacted by anyone claiming to be a debt collector, Better Business Bureau recommends:

Ask the caller for contact information – Ask for their name, the name of their company, street address and telephone number.  Refuse to discuss any debt until you receive the written notice of validation.

Contact the creditor – If the call is about a legitimate debt that you may already have paid off, share the information you have about the collection calls and find out who, if anyone, the creditor has authorized to collect the debt.

Know your rights – The FTC offers details of your rights under the Fair Debt Collection practices Act.   Don’t allow yourself to be bullied or coerced.

Report the calls – If the harassment continues after you’ve exercised your rights, contact the FTC, Connecticut Attorney General and Better Business Bureau to file a complaint, determine your rights under state law, and give other consumers a heads up about a rogue debt collection company.

You will find additional credit-related information at www.mymoney.gov, and in the “For Consumers” section at www.ct.bbb.org.

Founded in 1928, Connecticut BBB is an unbiased non-profit organization that sets and upholds high standards for fair and honest business behavior. BBB helps consumers find and recommend businesses, brands and charities they can trust, offers objective advice and a wide range of education on topics affecting marketplace trust. BBB also offers complaint and dispute resolution support for consumers and businesses. Today, 114 BBBs serve communities across the U.S. and Canada, evaluating and monitoring more than three million local and national businesses and charities. For more advice on finding companies and businesses, start your search with trust at http://www.bbb.org.”

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