Scammers are very good at impersonation. So when the phone rings and the person calling claims to be a debt collector, you need to be suspicious—even if they have a lot of personal information about you. It could be a con artist running the "phantom debt collector" scam.
These telephone swindlers often pretend to be with a law firm, government agency or police department. Victims say the callers can be mighty aggressive.
"They might threaten garnishment of your wages or seizure of your assets, all the way up to arrest and jail time if the consumer does not pay on this debt right away," said John Breyault, who runs the National Consumers League's Fraud.org website.
These phone bandits commonly target people who've taken out—or simply applied for—an online payday loan. They sound credible because they have all the personal information needed to apply for the loan. They probably know your bank and they might have all or part of your Social Security number.
"The fact that they have this incredible amount of personal information is part of the reason why people pay them," said Elizabeth Scott, an attorney with the Federal Trade Commission. "Victims are convinced that only someone who they legitimately owe money to would have this information."
Thousands of people have complained about phantom debt collectors. The FTC has already filed four cases involving fraudulent collection of online payday loans. The total loss from just these cases is estimated to be close to $20 million.
Maria, a victim in one of these cases, gave a sworn statement to the FTC that she and her husband received numerous harassing calls at home and work from a Mr. Hunt. She said he screamed at them and made numerous threats about a payday loan debt they did not owe.
"He claimed that his company would see me in court and that I should hire a good attorney; and that the police would arrive at my house within a half hour if I did not pay the debt," she said in court papers. "Both my husband and I were very scared."
Maria and her husband had never taken out a payday loan. She had been used as a reference by someone who applied for an online cash-advance loan.
These phantom debt collectors often say you owe thousands, but they're willing to settle for a couple of hundred dollars. They typically want payment by wire transfer or Green Dot MoneyPak.
"That's a red flag," Breyault said. "This is not how a legitimate lender accepts payment for your loan."