How to Handle Fake Debt Collectors For 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 scams from legitimate loan companies. 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. Here’s what you need to know to protect yourself from fake debt collectors.

Quick tips to avoid being scammed

  • 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.

Payday loan borrowers are easy targets

More than 12 million Americans use payday loans each year, and the typical borrower is in debt five months out of the year on average, making them easy targets. These short-term loans come with sky-high interest rates and are repaid in a very short timeframe (your next payday.) The fees, interest rates and tight turnaround to repayment force many borrowers to roll over their loans into new loans, leaving them trapped in a cycle of debt. In fact, more than 90% of payday loan borrowers have said they regret their original payday loan.

Payday loan borrowers tend to have multiple unpaid debts, no emergency fund and are often desperate for cash, making any instant loan offer sound like a lifesaver. But anything that sounds too good to be true almost certainly is.

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 several ways for scammers to muddy the waters.

Here’s how the scam works:

  • Research: Scam artists get a hold of your private information by purchasing it from a lead generator or by collecting it first-hand.
  • Contact: They’ll contact you by email or telephone and pose as a debt collector, hoping that you’ll take them at face value.
  • 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 in a dozen ways. They can buy, steal or even record it directly with a key-stroke tracker when you 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 legal or financial catastrophe threats.

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 cannot 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. However, not only is it illegal for a creditor to share the details of your debts with a third party, but they also 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 with the original creditor.

Information a legitimate payday lender should need

  • Background information: Your name, social security number, address, and contact information
  • Income information: Your pay cycle frequency, employer details (if any), and income amounts
  • Bank account information: This includes your checking account information and routing number

If you’re asked for anything else, that should be a red flag.

Information a scammer might request

  • Log-in information to your mobile bank accounts
  • Prepaid debit card numbers as a show of good faith
  • Credit card details and supporting information
  • Date of birth
  • Any other detailed financial information

If you’re asked for any of this information, hang up.

Always be the one to initiate any exchange of information. Do not give your data to someone who contacts you first or share that information via insecure methods (like over the phone or through email).

How to verify that a debt is yours

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

Start by inquiring about 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.

Confirm the information provided by the debt collector.

Any debt collector should be willing to provide:

  • The debt collector’s full name
  • The company name
  • The collection agency’s address
  • Company phone number
  • Company web address
  • Company email

If any debt collector refuses to provide this information, it’s a big red flag.

Request a debt validation notice

The Fair Debt Collection Practices Act (FDCPA) requires debt collection agencies to notify you of the amount of your debt and the names of the original and current creditors. They do this through a debt validation letter. If you haven’t gotten one, or the debt collector refuses to validate the debts when you ask them to, they are violating your rights.

If they do provide a validation notice and you don’t recognize any of the debts, something’s probably wrong.

If you’re still unsure 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 credit bureaus offer free annual credit reports, including a detailed history of your debts. You can get copies at

Know your rights

It’s worth noting that even if a debt is yours, a debt collector can invalidate their claim by It’s worth noting that even if a debt is yours, a debt collector can invalidate their claim by violating the law. There are rules about collection calls. For example, a debt collector cannot contact you at work if you tell them that your employer prohibits personal phone calls.

Take a good look at the details of the Fair Debt Collections Practices Act and learn your rights. If you believe your rights have been violated, contact a law firm. You may be able to take legal action.

How to report fake or abusive debt collectors

If you believe you have fallen victim to a debt collection scam, you need to file a complaint with the Federal Trade Commission (online at or by phone at 877-382-4357) as soon as possible. As part of a settlement with the FTC, any operators of a fraudulent debt collection scheme will be barred from the debt collection business.

To protect consumers from phantom debt collection and abusive debt collection practices, the FTC established a nationwide law enforcement and outreach initiative with the help of more than 50 federal and state law enforcement partners. ‘Operation Corrupt Collector’ targets debt collectors attempting to collect on fictitious debts.

The FTC also collaborates with state and local consumer protection agencies to help consumers understand their debt collection rights and what to do if they receive a call attempting to collect on an account they do not recognize.

You also can contact the Consumer Financial Protection Bureau (CFPB) to report debt collection scams and abuse (online at or by phone at 855-411-2372), and your state attorney general’s office in case any state laws have been violated.

The bottom line

Protecting yourself from fake debt collectors is easy if you know the warning signs. Be alert, verify everything and remember that if it sounds too good to be true, it probably is.


How can I protect myself from identity theft?

Never provide any personal data about yourself unless absolutely necessary. Protect yourself online. Use two-factor identification, regularly update your passwords and be careful of what you access over free wi-fi.

Can I have two payday loans at one time?

In some cases, getting two payday loans at one time may be possible. However, Consumer Financial Protection Bureau (CFPB) rules have been implemented to limit how people can access payday loans. In addition, certain states limit how much you can borrow, while payday loans are completely banned in other states.

How can I stop a debt collector from calling work?

Third-party debt collectors can only contact you from 8 a.m. to 9 p.m. They are not allowed to call your place of work if you tell them that your workplace does not allow you to receive calls. You can also tell them that they cannot contact you at your home address and phone number. If the debt collector contacts you anyway, report the company.
To stop a debt collector from contacting you altogether, you will need to send a certified return receipt letter to the collection company, instructing them to stop corresponding with you. Keep a copy of this letter. After that, they can only contact you if they plan to file a lawsuit against you.

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