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Be sure to check your DMs for debt Collectors and Scams
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Be sure to check your DMs for debt Scams and Collectors
The article was written by Lauren Schwahn Lead Writer | Personal finance and the debt Lauren Schwahn is a writer at NerdWallet who writes about budgeting, debt and money-saving strategies. She is a contributor to the "Millennial Money" column for The Associated Press. The work she has contributed to was highlighted by USA Today, MarketWatch and many more. Lauren holds a bachelor's degree in history from The University of California, Santa Cruz. She is located within San Francisco.
Updated February 11, 2022 at 4:05 AM PST
Written by Kathy Hinson Lead Assigning Editor Personal finances, credit scoring financial management and debt Kathy Hinson leads the Core Personal Finance team at NerdWallet. Prior to joining NerdWallet, she worked for 18 years working at The Oregonian in Portland in positions such as copy desk chief and team director of design and editing. Previous experience included copy editing and news for various Southern California newspapers, including the Los Angeles Times. She earned a bachelor's degree in mass communication and journalism at Iowa's University of Iowa.
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Social media is where you watch cooking videos, gaze at images of beautiful travel destinations and doomscroll through the endless headlines of news. Today, websites like Instagram, Facebook and Twitter could also be where debt collectors slide into your DMs.
In the latter half of 2021, rules will be changed under the law that went into effect that specify how third-party debt collectors can communicate using email, social media and text messages.
Consumer advocates such as April Kuehnhoff, a staff attorney at the National Consumer Law Center, are concerned that these regulations could create confusion and a rise in scams.
"It's far less expensive to make use of electronic communication to reach out to larger numbers of people. There will be a surge in the number of illegitimate actors that are impersonating debt collectors, and sending emails, direct messaging or texting people in an attempt to make them pay off debts they don't really have," Kuehnhoff says.
Spotting the signs and knowing your rights will help you protect yourself from fraudulent and unfair practices. Here's what you should be looking for and what you can do to remain safe as you sift through the notifications.
Recognize warning signs
A variety of warning signs could warn you of abusive behavior or scams:
The message isn't confidential.
Debt collectors may request to join your followers or friends as in the event that they inform you they're debt collectors. However, the FDCPA requires that all communication must be private. It means that messages shouldn't be visible to the public or to anyone else within your network on the platform. If you receive a message others can see, that signals a bad actor.
Critical information is missing
Debt collectors are legally obligated to disclose specific information regarding the debt, including the amount due as well as the name of the creditor and details regarding your rights. They'll usually provide the information, referred to as a validation notice the first time they reach you or within 5 days.
"If someone is simply saying "I'm an debt collector' and not doing anything else, I would definitely be suspicious right from the beginning," says Katie Bossler who is a quality assurance expert at GreenPath which is a non-profit credit counseling company.
You're harassed or threatened
"Sometimes fraudsters threaten customers with arrest or deportation or try to convince them to paying quickly," Kuehnhoff says. It's not illegal for collectors to threaten customers or use abusive or vulgar words.
Collectors are also not able to legally pursue you if the debt is not time-barred or is past the statute of limitations. What can you do to determine whether your debt is time-barred? Find out the laws of your state and look over your payment history on your credit reports. Or, consider seeking help from your or a nonprofit credit counseling agency.
You're asked to make an unusual payment
Fraudsters often seek fast payment through difficult-to-recover methods. A legitimate debt collector won't require you to pay with unreliable methods like a money transfer, bitcoin terminal or prepaid card Kuehnhoff claims. "They will not advise you to visit the Apple store and buy an Apple gift card."
Do not pay for anything until verifying that the debt and the collector are legitimate. You can find out more by contacting the Federal Trade Commission.
Know and protect your rights
The FDCPA offers you certain protections. You can, for instance, opt out of communication. Collectors must provide an easy, no-cost method to cease contact via social media. That won't erase the debt however.
Additionally, you have the right to challenge a debt you believe is not correct or is not yours. However, you'll have to submit a written request within 30 days from receiving notice to challenge or seek more information regarding the debt. Information on how to do either must be included in the initial letter sent by the collector to you.
What can you do to verify that the debt is legitimate and the collector is? Bossler suggests starting with pulling your free credit reports from AnnualCreditReport.com. "Make a list of all the debts that you owe to debtors, the balances, accounts numbers. The debt collector will often refer to the last four digits of the bank account," Bossler says.
You may be dealing with a collection agency for the original creditor and this makes it much easy to connect the information. But the original creditor may have transferred this debt to an external company. That third-party collector should give information like their name, business name and postal address. These details can be used to confirm their authenticity.
"Several states have debt collection licenses registered at the NMLS, which is the National Multistate Licensing [System]," Kuehnhoff says. "Even if your state doesn't utilize it, it could be a helpful place to verify if this name is a legitimate debt collection company that is registered across other states."
Even if all is well do not feel pressured to pay right away. Paying off a debt could bring back the debt that is beyond the statute of limitations. Instead, take the time to create plans that work for your financial situation and personal budget.
If a debt collector violates your rights, or you come across fraud, you may complain to the FTC and the Consumer Financial Protection Bureau or the office of your state attorney general.
The article was written by NerdWallet and was first printed by The Associated Press.
Author bios: Lauren Schwahn covers consumer credit and debt for NerdWallet. Her work has been highlighted by USA Today and The Associated Press.
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