Debt Collector Scams Targeting Payday Loan Borrowers
Updated on 29 November 2023
There’s a new reason to be stressed about phone calls from debt collectors: a growing number of debtors are being scammed into paying off debts they don’t owe by phantom debt collection agencies.
Scammers Targeting Payday Loan Borrowers
Thousands of Americans have reported receiving calls from fake debt collectors, according to the Federal Trade Commission. In response, the FTC has recently filed four cases
involving fraudulent debt collections that have cost victims an estimated total loss of $20 million.
How the Scammers Operate
Scammers appear to be targeting people who have recently taken out or applied for
online payday loans. In some cases, however, the victims hadn’t even applied for a loan, but had simply
provided their name as a reference for another borrower.
Typically, the scam artist impersonates a law firm, government agency or police officer and threatens to garnish wages, seize assets or even arrest the debtor if they
don’t pay off a debt or agree to a debt settlement. What makes these debt collection scams particularly convincing is that scammers have so much personal information
on debtors – which, of course, they’ve discovered through payday loan sites.
Why Payday Loan Borrowers are Vulnerable to Scams
They’re also targeting individuals likely to be stressed, and who therefore may not be as careful as they should be.
Because payday loans come with some of the highest interest rates and predatory terms around, people usually don’t borrow from payday loan centers until they’re so
overwhelmed with debt that they believe they are out of options. But when you’re that deep in debt, it can be hard to stay organized about whom you owe and how much
you owe to them – making it all too easy to fall for lies from phony creditors or bill collectors.
Tips for Avoiding Debt Collector Scams
If scammers agree to settle a debt worth thousands of dollars for a few hundred bucks, it can sound like a bargain. Little do debtors know that none of this money
will actually go to pay down their debts – and all of it will go into the hands of scammers.
Next time you get a call from a debt collector, take heed. Just because they have your personal information doesn’t mean they’re legitimate. Here are some
tips for avoiding fraud when dealing with debt collectors:
When it comes to your money, you shouldn’t trust anyone until they’ve proven they can be trusted. When debt collectors call, ask for the required written
validation notice that provides information on your debt and the debt collector. If they won’t agree to send it to you, consider it a red flag.
Don’t Fall for Scare Tactics
Scam artists use intimidation to bully debtors into paying debts – whether they owe them or not. You don’t have to fall for it. No matter what the caller
says, you cannot be arrested for failing to pay a debt. It’s true that you can be sued or your assets can be repossessed for being delinquent, but there
are ways to protect yourself – such as filing for bankruptcy. If you feel yourself start to give
in to the harassment, hang up the phone so you can collect your thoughts.
Do Your Research
Never send money to an unknown caller. Get the name and information of the debt collector and request information on the debt. If there’s any question
about whether you owe money, contact the original lender. Then, take the time to find out if the people calling you are really associated with the company
they claim to represent. Even if it turns out that you owe money, you may not owe it to the person who is contacting you.
Bankruptcy as a Solution for Debt Problems
If you’re struggling to stay on top of debt, the last thing you need to be worried about is bill collectors – real or fake. When debt is taking over your
life, bankruptcy may be able to offer a realistic solution. Contact DebtStoppers today to schedule a one-on-one debt analysis with one of our experienced
attorneys – and find out if bankruptcy could be your ticket to financial freedom.
Understanding Your Rights When Dealing with Debt Collectors
As a debtor, it's crucial to understand your rights when dealing with debt collectors. The Fair Debt Collection Practices Act (FDCPA) provides guidelines and protections for consumers against harassment, intimidation, and other unethical practices by debt collectors. Knowing your rights can help you avoid falling victim to scams and unfair treatment. Here are some key points to remember:
Debt collectors must provide you with a validation notice within five days of their initial contact. This notice should include the amount of the debt, the creditor's name, and your rights to dispute the debt. If you don't receive this notice or suspect that the debt is not yours, you can request debt verification from the collector. They are then required to provide proof of the debt before continuing their collection efforts.
The FDCPA sets specific guidelines for when and how debt collectors can contact you. They are not allowed to call you before 8 a.m. or after 9 p.m., and they cannot contact you at work if they know your employer disapproves. Additionally, if you inform the collector in writing that you want them to stop contacting you, they must cease all communication, except to inform you of any legal actions they may take.
Harassment and Abuse
Debt collectors are prohibited from using abusive, harassing, or deceptive tactics to collect a debt. They cannot threaten you with violence, use profane language, or make repeated phone calls to annoy you. Additionally, they cannot misrepresent themselves or the debt, including lying about the amount owed, the legal status of the debt, or their authority to collect.
Considering Illinois Bankruptcy Chapter 7
If you're overwhelmed by debt and struggling with debt collectors, filing for bankruptcy chapter 7 in Illinois might be a viable solution. Chapter 7 bankruptcy can help eliminate unsecured debts, such as credit card debt and medical bills, giving you a fresh financial start. It's important to consult with a qualified bankruptcy attorney to discuss your options and determine if chapter 7 is the right choice for you.
Contact a Trusted Bankruptcy Lawyer
If you're considering filing for bankruptcy chapter 7 in Illinois or need assistance dealing with debt collectors, it's essential to seek help from a trusted and experienced bankruptcy lawyer. They can guide you through the process, protect your rights, and help you make the best decisions for your financial future. Don't hesitate to reach out to a reputable attorney for the support and guidance you need.