Q: How does a consumer report a phony debt collector?
A: Consumers who owe money or are behind on their bills may be legitimately contacted by debt collectors to pay off debts. The BBB warns consumers, however, that phony debt collectors are lurking and active in the marketplace. In a recent release of the top complaints reported to the Better Business Bureau, collection agencies ranked fifth in number of complaints received.
With more than 15,000 complaints submitted, consumers need to be aware of the best practices for when it comes to handling debt collectors.
Debt collectors seek to reclaim funds on past-due accounts on behalf of creditors, businesses or individuals. But sometimes the "debt collector" calling turns out to be an identity thief who is trying to get you to divulge personal or financial information, such as your Social Security, bank and credit card numbers.
Oftentimes, scammers will impersonate legitimate debt collectors to illegitimately obtain financial information. These fraudulent calls can be harassing and threatening.
Consumers need to know the red flags for fraudulent debt collectors. If the collector refuses to reveal the name of his company or demands that the payments be made in cash or money transfer only, consumers need to report this immediately.
It is important for consumers to verify the alleged debt before taking action. BBB recommends doing the following:
1. Request written proof. Get documentation to help determine if the callers are actually identity thieves or if a debt is owed. By law, a debt collection agency must provide a validation notice within five days of contacting you about the debt. David Tulis 5/5/11 Within 30 days of receiving their validation notice, send the debt collector a written request to further verify the debt details. Do not provide personal or financial information unless the validity of the debt and the debt collector has been confirmed.
2. Verify the legitimacy. Get the debt collector's name and contact information to research the agency further. Search on the Internet to see if it has a website or a BBB business review at www.bbb.org. Cross-check contact information and call them using a phone number from a public or online directory. Verify that the representative who called is affiliated with the agency.
3. Avoid phony calls. Be wary if the debt cannot be verified or if no documentation is received. Advise the company to stop contacting you and register with the National Do Not Call Registry at www.DoNotCall.gov or 888-382-1222.
If you owe no debt
If you do not owe the alleged debt, BBB recommends doing the following:
1. Do not ignore the collector. It is best to respond immediately, even if you do not believe the debt is yours. Otherwise, the collector may continue contacting you or file a judgment.
2. Do not pay. Do not claim a debt that is not yours or make a payment on a bill just to make the collector "go away." One payment can indicate that you are accepting the full responsibility of the debt. The invalid debt could also reflect as a liability on your credit report.
3. Contest errors. If no debt is confirmed, contact any involved parties to clear up inaccuracies on your credit report, such as: the debt collector; the creditor or company claiming unresolved accounts; and the major credit bureaus. Write a detailed letter and include supporting documents to prove your case. The Federal Trade Commission provides additional resources for reporting errors. www.ftc.gov .
4. Check for identity theft. If contacted by a collection agency regarding erroneous bills or debts, it could be an indication of identity theft.
An impostor may be using your identity to make purchases, open accounts and obtain credit. Review your credit report to quickly identify fraudulent activity or make corrections; visit www.annualcreditreport.com for a free yearly credit report and get FTC advice for resolving specific identity theft problems relating to debt collectors.
BBB recommends doing the following for debt you do owe:
1. Know your responsibilities. It is not against the law for a debt collector or creditor to contact you. Discuss doing payment plan and request obligations in writing.
2. Complain about abusive practices. Report harassment, threats and other violations of federal telemarketing laws to the FTC. File a BBB complaint if you believe a debt collector is acting unethically. Also, state laws on debt collectors may vary. Do your research.
3. Stop collector calls. According to federal law, a debt collector cannot continue to contact you - at work or home - if you tell them to stop. David Tulis 5/5/11 Write a letter stating not to contact you anymore. Save a copy of the letter then send the original via certified mail and request a return receipt. If a debt is owed, the collector or creditor can still take legal action to collect funds and may contact you to inform you of its action.
Seek help for debt. Try using BBB's free online program www.bbb.org/credit-management.
Get answers to your questions each Friday from Jim Winsett, president and CEO of the Better Business Bureau Inc., which serves Southeast Tennessee and Northwest Georgia. Submit questions to his attention by writing to Business Editor Dave Flessner, Chattanooga Times Free Press, P.O. Box 1447, Chattanooga, TN 37401-1447, or by emailing him at dflessner@timesfreepress.com.