Personal Finance Resources: Financial Education & Literacy

5 Things to Do if You Receive a Phantom Debt Collection Call

Written by PSECU | Aug 31, 2020 7:40:10 PM

Out of the blue, you receive a very aggressive phone call about a debt that you owe. The caller is threatening legal action and insists that you take immediate steps to settle up with a wire transfer or prepaid debit card. Sure, you do have loans out, but you’re certain you’ve been paying on time. Still, there’s a slight bit of doubt in your mind, and the caller is really pressing. What should you do?

First, review the interaction. There are some definite red flags that could signal it’s a scam known as phantom debt collection:

  • Threat of some type of legal repercussions
  • Demand for immediate action
  • Wire transfer and a prepaid debit card as payment options

According to the Federal Trade Commission, you should do these five things if you feel you might be talking to a scammer:

  • Insist on verification – Ask for the caller’s name, company, company’s address, and telephone number. Then state you will not discuss the debt until you receive a written “validation notice.” As required by federal law, a debt collector must tell you the specific amount you owe, the name of the original creditor (it’s not unusual for the original creditor to sell their debt portfolio to legitimate debt collectors), and directions for challenging the claim.
  • Do not continue talking with the caller – If the caller provides a company name and address, discontinue the conversation. The next step is to write to the company to request that they stop calling you. Keep a copy of that letter for your records. Authentic debt collectors are forbidden from continued contact with you if you put your request in writing.
  • Never share personal or financial information – Legitimate debt collectors will have the information they need from the creditor.
  • Contact your creditor – Let your creditor know about the suspicious call you received and ask if they’ve authorized any third party to collect on their behalf.
  • Contact authorities – Phantom debt collecting is a huge, nationwide problem, so you should inform the Federal Trade Commission, as well as your state’s Attorney General’s office, of the call you received.

Follow the five steps above to steer clear of falling victim to a growing type of scam.

For more tips on protecting yourself from scams and identity theft, visit our WalletWorks page.