Some debt collectors are criminals. Don’t fall for their scams.

I have a colleague who says that if you randomly send 1,000 letters to folk in the US claiming that they owe you money, some of the recipients will send you checks. He has not actually tried this trick, but other crooked folk essentially have. The purpose of this blog entry is to bring to your attention–should you not yet be aware despite the fairly wide media coverage–that there are debt collectors that are simply fraudsters: they will claim you owe money when you don’t and try to get you to part with your cash through trickery and even intimidating threats. I will bother to show you just two of many fairly common examples.

The first is the classic Indian IRS scam. I have been one of their intended victims more than once. Luckily I readily spotted the scam and just played along with the aggressive-sounding “IRS agents” who called me. I guess I have a perverse sense of fun. The scam worked (and I bet it will be revived in the future) something like this: You get a phone call from a purported Internal Revenue Service agent claiming that you are behind in your taxes and that if you don’t pay immediately you will be arrested. Yes, they accuse you of a crime and threaten you with prison. They ask for a fairly modest amount, say $1,500, in exchange for their not sending the cops to your house. Please don’t fall for that trick.  As a CNN Money article indicates, one of the lead players in that scam was arrested in India, along with several accomplices in the US.

Closer to home, The Daily News reported the federal arrest of a ring of collectors who succeeded in stealing millions of dollars from US citizens by, among other misdeeds, falsely claiming the debtors would be arrested if they did not pay. These scams are a little trickier to spot. As the article indicates, the ringleader bought debts for pennies-on-the-dollar. It’s easy for you to fall for this type of scam because the debt in question may be or may have been legitimate, i.e., it was a debt that you did have. The tell-tale sign of the scam was the threat of arrest. Don’t fall for this. Debt collectors cannot send the cops to your house to arrest you.

Remember that even if you owe a debt, you have rights. Hey, this is America! With respect to consumer debts, the federal Fair Debt Collection Practices Act (and many other states’ laws, e.g., the Florida Consumer Collection Practices Act) protect you from collectors and creditors. Collectors and creditors have the right to collect money you owe; that goes without saying. However, they, like the rest of us, have to follow the law.

Here is the professionally self-serving part of this blog entry: If you are getting phone calls, letters, texts or e-mails from anyone claiming you owe them money, contact a consumer lawyer. He/she can evaluate the collection attempts and inform you of your rights in your specific situation.