Money Scams: How to Spot a Fake Debt Collector

debt collector calling phoneGetting a call from a debt collector is bad enough. Getting a call from a phony debt collector trying to scam you out of money you don't owe can be even worse.

The Federal Trade Commission announced Tuesday that it had settled with a California man who was working with phony debt collectors in India to scam American consumers. The FTC says the operation, which called itself American Credit Crunchers, took in more than $5 million in two years.

While the operation has been shut down and criminal charges are pending, it appears that similar scams are ongoing.

"At the time we filed the complaint in February, we had seen over 4,000 consumer complaints," says Elizabeth Scott, a staff attorney at the FTC who was involved with the case. "Unfortunately, we have not seen a slowdown since then."

So the bad news is that such scammers are still operating. The good news is that there are a number of clear warning signs that the person on the other end of the line might not be a real debt collector.

For instance, that both the American Credit Crunchers operation and another recent case both involved callers from India, and Scott says that most of the complaints received by the FTC did describe a caller with an Indian accent. Still, Scott says, consumers should pay less attention to the caller's accent and more to what they're saying.

"The red flags are less about accents, but the kinds of statements they make," she says. For example, if they're threatening to have you arrested. "You can't be arrested for private debt," Scott notes. But many consumers don't know that: The FTC describes one frightened consumer who paid more than $500 that he didn't owe to a scammer after he was threatened with immediate imprisonment.

Another big warning sign: If the story starts to unravel when you start to ask questions. Fake debt collectors will refuse to provide you with a written "validation notice" of the debt, which is required under the Fair Debt Collection Practices Act. And most suspiciously, they'll likely demand payment using a money transfer service like Moneygram or Western Union.

Of course, the biggest tip-off that the person on the phone isn't a real debt collector is that you don't actually have any outstanding debts. But often, the people who are targeted by these scammers are indeed dire financial straits, and have taken out payday loans (or at least applied for them). Scott says that it's likely these scammers are somehow obtaining information from websites that allow you to apply for payday loans from multiple lenders at once.

"Be careful about how much information you're willing to input into these apps," she warns. "[The scam] sounds somewhat legitimate because they have a whole host of information about you."

So even if you do have unpaid loans, if you get a call, do your due diligence. Ask to get a written notice of the debt, and don't hesitate to call your original creditor to ask if your debt has been turned over to a collection agency. And if anyone threatens to toss you in jail for an unpaid debt, don't worry -- with a few exceptions, debtors' prisons largely went out of style in the 19th century.

But not completely out of style, which leads to this final word of advice: If you get a court summons about a debt, don't ignore it, even if you can't afford to pay. Real debt collectors in many states are manipulating courts to turn them into payment enforcers. More than a third of U.S. states allow borrowers who can't or won't pay their debts to be jailed for failing to appear in court when summoned, or for not making court mandated payments. So, broke or not, you're much better off if you're in the courtroom when the bailiff calls your name.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at, and follow him on Twitter at @Brownellorama.

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David Fights

Upon receiving the scammers sudden threat to get them jailed, most consumers panic and act in haste. Its obvious that there is lack of information spread about the fact that there isn't any chance of someone going to jail without being served, written summons. reporting scam call numbers at would help spread the word

May 07 2013 at 2:17 PM Report abuse rate up rate down Reply

Thanks for sharing this article. I did learned something out from it. Try to visit here --- for moreinformation about the laws, and rights of the taxpayers. Keep on posting.

November 04 2012 at 6:07 AM Report abuse rate up rate down Reply

Even IF it is a legitimate debt, they can drive you crazy trying to collect. my aged mother took out a loan without telling anyone in the family about it, to pay for the property taxes and then has trouble coming up with it and doesn't want to deal with it and scammers somehow knew, or found out cause she talked on cordless or cell phone( which ANYONE could intercept, so avoid all phones that aren't landline for personal info, or as others said, any phone really), or fished and happened to hit on her debt worries, and i, unemployed i admit, happened to hear them talking to her deaf ears and listened in to the foreign accent and bad english and thought oh no, but then she was really trying to pay off the real guys, who said they sold off the debt, which she DOES owe, to foriegn sounding types too so which is which? and they tried to make her pay THEM (the fakes) 350 western union, but the walmart lady knew that that was a red flag, but STOPPED her and turned her on to the phonyness. now she thinks she is dealing with the REAL guys, but maybe not, (i dropped out of high school, so can't help her much but even i thanks to internet use, get it, and warnings, sort of, i guess. well anyhow, i think she should have declared bankrupty, left the overpriced house since dad died and she can't afford it on s.s. and a little extra money here and there. she won't listen and wants to stay there. what should she do as people prey on the ELDERLY and also she is stubborn and doesn't want to ask for charity or a reverse mortgage and to be honest, my late father was the educated one and took care of everything. she should just forfeit, right? respond here what you think, i will check back later. i wish i COULD help more...... jobs are scarce but i really think SHE SHOULD just move but she is kind of a reclusive hoarder type actually. [hint of grey gardens].

October 30 2012 at 3:49 AM Report abuse rate up rate down Reply

I just answer the phone saying suicide hotline....hold pleeeze........

October 30 2012 at 1:12 AM Report abuse rate up rate down Reply

You get a call from someplace called the American Credit Crunchers and you send them money? Why? How about the Stick It To America Collection Agency? Would the check be in the mail for them too?

October 30 2012 at 12:24 AM Report abuse rate up rate down Reply

Just for the heck of it. Keep a whistle next to your phone.

October 29 2012 at 10:15 PM Report abuse +1 rate up rate down Reply

Never Ever talk to a debt collector on the phone,,,,, make them put it in the mail, that way you have a record of who said what, when, where & you can check them out.

October 29 2012 at 8:29 PM Report abuse +2 rate up rate down Reply

Folks there are plenty of comments here from well meaning people giving advice as to what to do when and if you receive such a call. The number one rule of such unsolicited advice is: never follow unsolicited advice given over the internet.
The article offers some solutions, but when in doubt, talk to a professional.

October 29 2012 at 3:59 PM Report abuse +2 rate up rate down Reply

Nener, never talk to anybody with an indian or a paki accent.

October 29 2012 at 3:49 PM Report abuse +2 rate up rate down Reply

You go FTC GET THEM ALL !!!!!!

October 29 2012 at 3:39 PM Report abuse +2 rate up rate down Reply