Scammers impersonate debt collectors to try to steal your money.
When the call comes, it sounds legit.
The caller asks for you by name. They have some personal information about you.
They say they represent a debt collection agency and they're calling to collect a debt.
They ask you to pay. They may use a "good guy" approach, offering to accept just a percentage of what they say you owe.
As the call continues, if you don't offer to pay, the collector may get nasty and use foul language. They may threaten to garnish your wages, Social Security or veterans benefits. They may threaten to initiate court actions or have you arrested if you don't fork over what they say you owe.
There's a pretty good chance the caller is a phony, and nothing but a lowlife scammer who wants to steal your money.
These thieves make themselves sound legit because they have found bits and pieces of private information about you. Maybe it came from a public database, or maybe they purchased the information on the black market.
They may know companies you've done business with, so the debt they claim you owe may be from a company you recognize. They may know about a real loan you have. They may even use the name of an authentic debt collection company, so if you search online for the company name, it will appear to be genuine.
But with a little knowledge about your rights under the Fair Debt Collection Practices Act (FDCPA), you can catch them in the act rather than get caught in a scam.
First, ask the caller for his name, company, address and telephone number. Write it down. If the caller won't give it, the collector is not for real. (Or if it is a real collector instead of a scammer, the collector is breaking the law by not identifying himself.)
During the call, the phony collector may try to get more personal information about you by telling you they need to confirm your identity.
"Never give out or confirm personal financial or other sensitive information like your bank account, credit card, or Social Security number unless you know whom you're dealing with," the Federal Trade Commission (FTC) says. "Scam artists, like fake debt collectors, can use your information to commit identity theft - charging your existing credit cards, opening new credit card, checking, or savings accounts, writing fraudulent checks, or taking out loans in your name."
Tell the caller you won't talk until you receive written notification of the debt, which is called a "validation notice." The notice must include the amount of the debt, the name of the creditor you owe, and your rights under the FDCPA, the FTC says.
If the debt collector is real, by law, the validation notice must be sent to you within five days of when the collector first contacts you. Then you'll have 30 days to dispute the debt in writing if you believe all or part of the debt is a mistake.
The Consumer Financial Protection Bureau offers sample letters you can use when responding to a validation notice.
But if the caller is a scammer, you probably won't have to take that step.
DO SOME RESEARCH AND REPORTING
While you wait for the collector to send a validation notice, you can do your own homework.
If the caller is based out of state, contact that state's attorney general's office to see if the state requires collectors to be licensed or registered. If it's required, see if the collector who called you is up to snuff with that state.
If the caller is from New Jersey, don't bother. New Jersey doesn't require licensing or registration for debt collectors. (In 2009, a bill that would have done that was passed in the Assembly, but it never got any farther.)
Collectors in New Jersey have to post a $5,000 bond with the Division of Revenue and Enterprise Services.
That small bond isn't enough, said Ronald LeVine, a consumer law attorney in Hackensack.
"There a tremendous amount of fraud going on and unfortunately the regulatory authorities are limited in what they can go after," LeVine said, noting that many of the financial transactions are traceable if law enforcement dedicated the resources to investigate. "This is a criminal activity. Maybe they should go after them instead of people who have open bottles. We have police officers guarding every pothole and this kind of stuff isn't investigated."
Back to what you can do.
If the collector told you who the creditor is, call the creditor directly. A direct conversation should enable you to determine if you really owe a debt to the company. And even if you do owe money, you should make sure the collector who contacted you truly represents the creditor. Ask the company if it hired a collection agency to act on its behalf, and make sure the name is the same as the one given to you by the collector.
If you determine this is a fake collector -- or a real one who is not staying within the boundaries of the law -- file a complaint with the FTC.
You can also file a complaint with the New Jersey Division of Consumer Affairs, but it will refer the complaint to the feds.
Also file a complaint with the consumer protection division or attorney general's office in the state where the call originated.
Learn more about your rights from the Federal Trade Commission.
Have you been Bamboozled? Reach Karin Price Mueller at Bamboozled@NJAdvanceMedia.com. Follow her on Twitter @KPMueller. Find Bamboozled on Facebook. Mueller is also the founder of NJMoneyHelp.com.