How to Handle Fake Debt Collectors of Payday Loans

Payday loan borrowers are used to giving up their paychecks to their lenders, many of whom offer services that already border on predatory. In an industry so full of shady practices, it can be difficult to discern the blatant scams from the more subtle ones. Thieves frequently try to take advantage of the fact that many of these borrowers don’t know how to recognize or how to handle fake debt collectors.

Unfortunately, when you’re under the stress of living paycheck to paycheck, you’re particularly susceptible to financial intimidation. And at the same time, your margins are so thin that falling for a scam can legitimately ruin you. You must take steps to protect yourself, so here’s everything you need to know.

Quick Tips

  • Do your due diligence. Don’t think that someone is a legitimate debt collector just because they know your Social Security Number.
  • Don’t fall for scare tactics. Hang up the phone if you’re contacted by anyone overly aggressive or threatening.
  • Know your rights. Make debt collectors provide all the legally required details about themselves and any debts that they claim you owe.
  • Report fake debt collectors and any other payday loan scam that you’re targeted by, whether you fall for them or not.

How Does the Scam Work?

Fake debt collectors are a fairly common type of payday loan scam. While it might seem like a simple matter to keep track of your creditors and recognize the real from the fake, there are a number of ways for thieves to muddy the waters.

Here’s how the scam works:

  1. Research: Scam artists get a hold of your private information, either by purchasing it from a lead generator or by collecting it first-hand.
  2. Contact: They’ll contact you either by email or by telephone and pose as a debt collector, hoping that you’ll take them at face value.
  3. Persuade: If you refuse to comply with their demands, they’ll use underhanded tactics to pressure you into handing over your cash.

Scam artists can get your information through a dozen ways. They can buy it, steal it, or even record it directly with a key-stroke tracker when you go to apply for a payday loan online.

Once they have your name, address, and Social Security Number, it’s much more tempting to believe that they are who they say they are. And if that’s not enough to convince you, they’ll get aggressive and start trying to intimidate you into complying with threats of legal or financial catastrophe.

Red Flags: How to Spot Fake Debt Collectors

Trust your gut. If you’re feeling panicked or rushed into paying, it’s a good sign that you’re dealing with a fake debt collector.

There are strict laws around what debt collectors can say to you and what options they have when you’re unable to pay them. So if you’re contacted by anyone who threatens the following, be careful:

  • Arrest or Jail Time: While payday lenders can take you to court, they can’t have you arrested. And you’ll never face jail time for not paying your debt, though you might face a warrant for your arrest if you don’t show up to court when summoned.
  • Job Loss: Fake debt collectors will sometimes threaten to report your debts to your employer and have you fired. But not only is it illegal for a creditor to share the details of your debts with a third party, they can’t leave that information where someone could find it (like on a voicemail).
  • Any Other Immediate Repercussions: Scam artists almost always try to push you into making a snap decision since they know their claims won’t stand up to scrutiny. So any time you’re feeling rushed into making a decision, take a moment to consider whether you’re being scammed.

Of course, the biggest red flag is simply not recognizing a debt that someone claims you owe. If you don’t remember taking out the loan that a collector is urging you to pay, do your research to verify whether or not it belongs to you.

How to Verify That a Debt is Yours

Don’t take any lender or debt collector at their word when they claim that a debt is yours. You should always do your due diligence.

Start by inquiring after the identity of the person who contacted you. They’re required to disclose who they are, which may help you match the debt they’re trying to collect to one of your previous loans.

Debt collectors are also required to tell you the amount of your debt and the names of the original and current creditors. If you don’t recognize any of them, something’s probably wrong.

If you’re still not sure whether the debt belongs to you because you don’t have a perfect memory or record of your loan history, you can retrieve a copy of your credit reports to see a detailed log.

The three major major credit bureaus all offer free annual credit reports which include a detailed history of your debts.


It’s worth noting that even if a debt is yours, a debt collector can invalidate their claim by violating the law. Take a good look at the details of the Fair Debt Collections Practices Act so that you know your rights.

How to Report Fake or Abusive Debt Collectors

If a fake debt collector contacts you or you find yourself the target of any other payday loan scam, you can and should report them to the proper authorities.

Just because you were able to see through a scam, doesn’t mean the next person will. And while it may not get you your money back if you were a victim, you can help prevent the same thing from happening to someone else. It always helps to get the word out. 

You can report fake debt collectors or any other payday loan scam to the Consumer Financial Protection Bureau, the Federal Trade Commission, or your state’s attorney general.

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