Debt collection scams milk Britons out of millions

Have you noticed that everyone is in debt now?  No one is admitting it, but economic reports suggest that everyone falls behind on one or two payments.  For those of us who fall behind regularly, or who run into a bad stretch, we not only need to watch out for the bailiffs, we also need to protect ourselves from the debt collection scammers.

Most of us would never admit that we paid a company called us from Russia and threatened terrible consequences if we didn’t pay a £500 debt that was incurred in our name. However, the truth is, thousands of people do pay. 

After all, most of us don’t want to find out the hard way whether we can get sent to some gulag for non-payment of a foreign debt.  The security that we are no longer indebted to a crime lord in a foreign state with 20 consonants in its name is worth the 500 pounds.
 
The problem has become so widespread that Consumer Direct East Midlands, the government’s consumer advice service, is issuing a warning.  They are the government office who receives worried calls from panicked residents who receive phone calls or letters from a foreign debt collection agency in the Czech Republic demanding money for an outstanding debt.

It’s all bogus.
 
However, you have to admit that the fraudsters are good – very good.  They threaten legal proceedings, a county court judgment; the debt being referred to a UK based doorstep collector, and even some dubious and untraceable international laws and consequences.

The con artists are good at frightening consumers into paying a small of the totally imaginary debt. Consumer Direct East Midlands is telling people not to respond.  Phoning that number, even to tell them that you know they are a scammer, will get your contact information on a few hundred other lists.  After all – until you respond, they don’t really know if their information is correct.

Sara Barry of Consumer Direct East Midlands Manager said: ‘Scams and rip-off money-making schemes continue to resurface in a number of different guises, but they all have the same purpose - to part you from your money. This is an attempt to scare people into sending cash to avoid further action being taken against them. Our advice would be to stop and think before you respond to any unsolicited mail. Don’t send money to anyone and don’t give out bank or other personal information. Unfortunately if you do respond to these scams, you could be targeted again.’

This is not the only scam.  After all, how many people confirm a bailiff’s identity before they let them steal their television? Email phishing, scams that demand repayment of a bogus debt is another growing scam.
There are ways to protect yourself from these scams.  Phone around and ask your friends if they received a letter.  In many cases, these companies blanket entire neighbourhoods.  Calling a government agency is also a good first step. Call Consumer Direct and find out if the company is legitimate.

Common sense should be the first defence.  If you don’t remember buying from the company named, and have never done business in Russia, then you don’t owe any money. Many of these companies play on people’s fear of being embarrassed.  Everyone is victimized by a scam at some time, but most people would rather take the loss instead of reporting the scam and recovering their money.

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Debt collection scams are growing. Many people fear the unknown; that is why it is easier for a foreign company to get money.  If a UK company demands money you can just tell them to meet you in court.  The thought of a foreign company’s legal proceedings can turn the most stalwart CEOs blood to ice.

There are some easy ways to tell if it is a scam.  Ask to mail them information.  If the mailing address is a P.O. Box, then tell them that you are using a courier service and need to office address.  This will usually end the issue.

Of course, many are now labelling IVAs as a debt collection scam. The IVA does not, ever, reduce the amount you owe by 30 – 50 – 90%. That is impossible.  You may get some relief, but it will be offset by the IVA fees, especially if you are late with a couple payments in the next five years.

Unsecured loan scams are also common. Despite popular belief, an unsecured loan lending company ‘can’ ask the court to force the sale of a home to repay the debt.  So, you consolidate your loans with an unsecured loan, pay double the interest rate of a traditional debt consolidation loan, and in the end, you may still lose your home.

There is an easy way to avoid financial scams. Just visit the debt management Credit Action, or Consumer Credit Counselling Service.  You won’t have to pay a single cent to learn how to save hundreds of pounds, and avoid becoming the next victim of a scam.