‘Phantom debt’ haunts thousands of consumers each year
If you’re unsure about a debt, always ask for validation before making any payment
(InvestigateTV) — The Federal Trade Commission (FTC) in 2022 returned more than $1 million to consumers conned in a “phantom debt” collection scheme.
Phantom debt is a term for debt that either does not exist, has already been discharged, or has been artificially (and illegally) inflated, but somehow continues to haunt the debtor, according to the Consumer Financial Protection Bureau (CFPB). Thousands of consumers are targeted in phantom debt schemes every year.
Typically, crooks get someone’s personal information from the dark web and then try to scare that person into paying a phony bill, according to AARP. They may also pretend to be from a collection or government agency, such as the Internal Revenue Service (IRS).
The CFPB and FTC have taken action against several phantom debt scammers over the years.
John McNamara, with the CFPB, said this behavior is absolutely criminal. One red flag is if the scammer asks someone to pay a bill in an unusual way or threatens you with serious consequences if you do not pay.
“If you ask a scammer questions, they generally will hang the phone up immediately and they will go away. Any sort of rush for urgency to pay right away, generated by a phone call, should be met by the consumer with a high degree of suspicion,” McNamara explained. “It’s okay, ask questions, ask them to put it in writing again. Scammers will almost never do that.”
McNamara suggested good records of past debt. If contacted by a credit collection agency, request a debt validation letter and check credit reports regularly.
If there is legitimate old debt, it’s possible to negotiate with the debt collection agency and come up with a plan to pay it off.
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