Being Bothered by a Debt Collector? Here’s How to Tell if the Debt is Legitimate

July 5, 2020CreditBy toptierfinancial

It is never a pleasant experience to receive phone calls or other communications from a debt collector. What’s worse is that sometimes collectors may contact consumers about debts that are not legitimate. To protect yourself from a creditor collecting something they don’t deserve to receive—something you don’t owe—you will need to take an important, and time-sensitive step: verify the debt’s legitimacy. Here’s how.

Possible Scenarios

In some cases, you may receive a collection call that you were fully expecting to receive. You knew you that your delinquent account was sent to collections, you remembered exactly what you owed, and you knew the collector would be making attempts to collect. However, there are quite a few scenarios that are not so straightforward.

You don’t remember the debt. A collector could contact you about a debt you have never heard of and do not recall ever owing. In this case, you would not want to blindly pay the debt or even promise to pay the debt. The collector may simply have gotten the wrong information or you could be targeted by a fake collection scam. Verifying the debt will ensure that you do not pay money to a scammer and can clarify the origin of the debt. Maybe you are a co-signor and simply forgot about taking responsibility to cover the debt, or maybe there is a genuine error.

The amount looks wrong to you. Let’s say you knew that one of your debts would be sent to collections. It was a credit card bill for $500. A few months later you get a call from a collector demanding $1,000. Something is not adding up. Verifying the debt will help you sort this out.

The debt is very old and may be “zombie debt.” When debt is of a certain age it passes the statute of limitations (which varies by state law). This means that the collector cannot legally sue you. However, if you make a payment, the statute of limitations could reset, which would refresh the collector’s right to sue you. Collectors who go after zombie debt are known for using especially deceitful tactics. Verifying the debt can ensure that you do not fall for one of their tricks and restart the statute of limitations.

How to Validate and Verify the Debt

Your rights to clarify the legitimacy of a collected debt come primarily from the Fair Debt Collection Practices Act (FDCPA). This federal law controls what debt collectors can do in their collection efforts.

Validation

When a debt collector contacts you about a debt, there are several pieces of information that they must provide. As the CFPB explains, these are:

The creditor’s name
The amount you allegedly owe
Your right to dispute the debt within 30 days and their right to assume the debt is valid if you do not
Your right to dispute the debt within 30 days, and that they will provide verification if you do
Your right to request the name and address of the original creditor within 30 days, and that they will provide the information if you do

A collector must provide this information during the first contact with you or via a written notice within five days after initially contacting you. The information provided by the collector is called the “validation notice.” The CFPB gives two important warnings about this. First, if the collector initially calls you by phone, demand that they contact you in writing. Second, do not give any personal or financial information until you confirm that you are dealing with a real debt collector.

Verification

After receiving the validation notice, you can dispute the debt, which means you will submit a letter to the collector, demanding that they verify the debt. This is your right according to bullet #4 above. Important: You technically must submit the dispute/verification request within 30 days of when you received the required information (the validation) from the collector. You should act quickly to ensure your compliance during this timeframe. However, a collector can (and most probably would) provide the information even if you request verification after the 30-day deadline has passed.

Your letter essentially just needs be dated and needs to say “I don’t owe this debt unless you can prove it, so prove it.” To make the letter a bit more formal than that one-liner, consider using the free template from the CFPB. Simply fill in your information into the letter template where indicated and mail it to the collector. Keep a copy for your records. Ideally, you will send it with a return receipt so you have proof of sending the letter and the date it was sent.

Once you submit the letter, the collector cannot contact you to make collection attempts until they provide you with verification of the debt.

Other means of verification

In addition to your rights under the FDCPA, described above, you can try a few other tactics to verify a debt. These steps may simply jog your memory about the debt if you have forgotten, or they could affirm your suspicion that the debt is not legitimate. These are simple and quick, and could be done before or after you formally dispute the debt.

First, check your credit report. Make sure that what the collector told you lines up with what your credit report indicates. If the collector is referencing a debt you have no recollection of and that debt isn’t even on your credit report, that should raise a red flag. Second, you can contact the alleged original creditor to inquire about the debt. This can help ensure that the original creditor did in fact sell the debt to the collector as the collector claimed.

Verification is Worth It

If you are contacted by a collector about a debt that does not sound familiar to you, then you should probably dispute the debt, in accordance with your rights under the FDCPA. You have nothing to lose in taking this protective measure. The process may just reveal that you owe the debt, but at least you will have peace of mind from knowing who to pay and how much to pay. On the other hand, the collection attempt may not be legitimate. You could be the target of a scam or an error. In either case, you will be glad you did not pay something you did not owe.

The post Being Bothered by a Debt Collector? Here’s How to Tell if the Debt is Legitimate appeared first on NFCC.

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Scam Alert: Watch Out for these COVID-19 Scams

July 2, 2020CreditBy toptierfinancial

Consumers already have a lot on their minds right now, given the ongoing economic roller coaster ride, which shows no end in sight. Add one more item of concern to that list: pervasive and malicious scams. Of course, scamming activity is always a threat, but consumers should be on even higher alert now. Scammers like to take advantage of chaotic situations, and the COVID-19 pandemic is no exception. Here is a closer look at some common scams and tips for avoiding them and protecting your personal information.

Personal Protective Equipment (PPE) and Coronavirus Treatments 

These two schemes prey directly on people’s concerns about the Coronavirus and their efforts to keep themselves and others safe. The first involves fake offers for PPE or for equipment used to manufacture PPE. In one variation of the scam, a fake seller will offer PPE, will only want to discuss the sale via telephone or email, and will demand payment immediately. The buyer is left with no way to verify the seller’s credentials. Chances are, if the seller will not prove their existence and legitimacy as a distributor of PPE, it’s a scam.

Another variation may involve a work-from-home scheme, advertised as a way to earn money by making PPE for other people. Sounds like a great thing, right? But here’s the problem: the “employer” will require payment for some type of manufacturing equipment. Again, the seller/employer will be impossible to verify. Don’t fall for it.

Another scam involves the promise of Coronavirus treatments. This scam boils down to false advertising. You might actually get something in return for your money, but it will be merely an unverified “treatment” with no scientific basis as a cure or preventative treatment. The FTC has cracked down against companies advertising these treatments, and reports that most have stopped. So, this scam may pose less of a threat in the future.

Tips: Do not pay for PPE (or anything else for that matter!) without verifying the legitimacy of the seller in multiple channels. Remember that there is no proven, publicly available Coronavirus treatment.

Contact Tracing and Mobile Banking Apps

As you may have heard, contact tracing is an important tool used by health officials to limit the spread of Coronavirus. It allows officials to find and notify the people who have been in contact with someone known to have the virus. Scammers are taking advantage by sending text messages telling people they have been exposed to the virus. The texts include malicious links, which when clicked can place dangerous software on your phone and potentially grant access to sensitive information. This scam may also include phone calls, in which a fake “health official” asks for information like your social security number.

Through this scam or others like it, spammers can put trojans or other malicious software on your phone. These sophisticated tricks can replicate applications on your phone to look like the real application, but are actually additional “layers” that steal your information (account names, numbers, passwords, etc.). As people are staying in their homes more, mobile banking is becoming more popular and is a particularly concerning target for these spammers. See this guidance from the FBI about how mobile banking scams work and steps you can take to improve your security.

Tips: Never give out your Social Security Number or other private personal information over the phone, particularly to someone who made an unsolicited call to you. Follow the general tips to be on guard against government impostor scams. Do not click links from text messages unless you are certain that the source can be trusted. Consider options to filter unwanted text messages on your phone. Use multi-factor authentication on your important accounts, to provide an extra layer of security between hackers and your accounts. If you have important information on your phone, consider backing up the device regularly.

Unemployment Benefits

Unemployment claims have increased significantly since the pandemic began, and the CARES Act expanded unemployment benefits. Now, scammers have devised a way to file for unemployment on your behalf and have the money routed to them. This specifically targets people who have not filed for unemployment. The FTC has called this a “large scale scam,” so you want to be on the lookout for suspicious activity. The tell-tale sign you have been affected is if you receive a letter about your unemployment benefits, but you never filed an application. If that happens, the FTC recommends that you notify your employer, report the fraud to your state unemployment office, report the fraud to the FTC, and review your credit reports. See their full recommendations here.

Tips: Keep a close eye on your mail during the pandemic. Do not throw mail from an unemployment office away thinking that it does not apply to you. If you receive a letter referencing an application for benefits that you did not submit, follow the FTC guidelines (linked above) immediately.

Utility Shutoffs

This is not a new or innovative scam, but it is a timely trick. With many people struggling to make ends meet, the threat of a utility shutoff may seem very real. However, you must be on the lookout for fraudsters who call, purporting to be your utility company. The scam can take many forms, including one where they do not claim you owe anything but actually claim that they need to process a refund! The absolute best rule is to hang up and call your utility company directly, using a trusted number from your bill or website. Also, check out the AARP’s guide to avoiding these scams.

Tips: Do not give any payment or other personal information to someone in an unsolicited “utilities” call. Call the utility company directly to inquire about the status of your account.

Be Careful!

As you can see, there are many ways that scammers are trying to take advantage of people in the current chaotic environment. Stay alert and follow these tips to avoid becoming a victim. If you are ever uncertain about whether a request is legitimate, remember that it is better to be safe than sorry.

The post Scam Alert: Watch Out for these COVID-19 Scams appeared first on NFCC.

Read more: nfcc.org

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