Don’t fall for a debt collection scam

"Your account will go to court tomorrow." The number of phone calls and letters that make this threat are growing. The heart-breaking part is that most of these calls or letters are fraudulent in nature.  The money you pay these people does not decrease your debts. It does not go to your debtors, or the courts.

The baffling thing is that many people, with no debt problems, and money in the banks send the money to these scam artists.  These are intelligent, educated people.  Yet, thousands of them are scammed each year.

Most people pay out of fear. They fear a black mark on their credit rating, being at the mercy of a foreign court, or having a simple ₤500 debt balloon into ₤5000 in court fees.  Others are willing to pay the blackmail fee just to get rid of the annoying telemarketers and letters. Unfortunately, once you pay, your information is sold to a mailing-list company which puts you on their ‘hot prospect’ lists.

The debt industry makes it easy to set up a scam.  There are thousands of debt collection businesses. They buy the debt from a bank, for about 5% of the actual value, and then they start harassing the clients.  This makes it difficult to separate the scams from the ‘official’ debt collection agencies.

Even the legal debt collection companies resort to illegal practices like verbal abuse, telephone harassment, emotional abuse, threatening lawsuits, and even violence. This makes it difficult to separate the official agencies from the scams.

We’ve all heard the horror stories. Debt collection companies that phone every 15 minutes, phoning the office, or trying to collect money from the wrong person.

The scammers only need to take advantage of what is happening in the market and use it to their advantage.

Trick One

The first trick is to ask for a little bit of the debt so they can stop the court proceedings. Once the company has your bank information, whether from a credit card, check, or direct deposit, then they use the information to withdraw money several times.

Trick Two

They imitate legitimate lenders offering credit cards, debt, or other financial services in an attempt to get your money.  If you didn’t fill out an application for a financial product, then you may be walking into a scam.
You’ ‘pre-qualify’ fort a low-interest loan or credit card, or repair bad credit even if banks have turned you down. The catch, you must pay a processing fee of a few hundred pounds.
Trick Three

You are not asked to send money anywhere. Instead, a doorstep agent will pick up the money. Once the cash is in their hand – it is gone, forever.

Foreign Debt Collectors

The growing number of foreign debt collectors, legit and illegal, is becoming a nuisance in the UK.  They threaten that a doorstep agent will appear to collect money, or that court proceedings will follow.  They may even make the letter look like it was sent from the courts.

John Field, Consumer Direct Centre Manager said “This is a desperate attempt at conning you out of your cash, give in to these con men and the likelihood is that they will see you as an “easy touch” and you could be targeted again.

Email Scam

An email promises to consolidate a loan, and stop debt problems, in return for a fee.  Read between the lines. Talk with your creditors about a modified payment plan.  Contact a credit counselling service. A debt collection agency will help you do this for free.

Solicitation

You are promised something that you didn’t ask for – for a fee. This can be in the form of work, a lotto that you already won, debt resolution, a loan, or credit cards.  The last is a very dangerous version of this scam.  It is easy to mimic a legitimate application for a credit card. Once done, they mail it to their victims. Then, the victims return their information, which is used to withdraw money from their bank accounts, or apply for loans.

Create a Safety Net

Never pay for a promise.  Legitimate lenders never ‘guarantee’ a card, loan, or debt solution before the application is approved. They require an application, appraisal, or report fees, but these fees are not solicited before the application is approved.

All financial fees are paid to the lender, not to the broker who arranged the ‘guaranteed’ loan.

Never give your information to anyone over the telephone or in an email.  Never send information to a box number. Last, always make sure a company is legitimate before you instigate negotiations.  If you ask a company for their head office address, and they refuse, it is a scam.

Contact a credit counselling service and ask for their help.  Give your agent’s name to the collection person and see what their response is.
Remember that scammers are smart. They learn how to use manipulation, fear, and ignorance to make a profit. Don’t be too embarrassed to get help, or make a report.

If people have concerns they can call Consumer Direct on 08454 040506.  Or Visit: http://www.oft.gov.uk/oft_at_work/consumer_initiatives/scams/email-spam