How Collection Scams Work & What to Do

Updated: Jun 19, 2019

This one takes on many varieties/scenarios, but they always want your money. You receive a phone call from an assertive individual claiming you owe money for something.  

  • IRS saying you owe back taxes

  • Utility company stating you’ve missed several payments

  • Police department or Court stating there’s a warrant out for your arrest (unpaid tickets, missed jury duty, etc.)

Those are the top 3 reasons, but they evolve.  Either way, the caller will advise you owe money, and threaten that something bad will happen if you don’t pay immediately. (arrest you, show up at your house or your place of employment, turn off your service, garnish wages, etc.)

Why this scam works:

People feel intimidated when they receive a threatening phone call.  In the back of their mind they’re worried there is a possibility something didn’t get paid.  Instead of paying the company you owe, the caller will advise you to purchase gift cards and read the numbers on them in order to satisfy the debt. You’re so upset and perhaps embarrassed that you just want this to be over.  You may act out of fear.

What you need to do:

Even if you did owe money to a company, there are collection rules and laws that the collection agency must abide by including when/where they can call, what they can say, etc.  Threatening an arrest or harm to someone is not permissible.  

  • See the Fair Debt Collection Practices Act. (FDCPA) (

  • Ask them what company they work for and get their name and a call back number.  

  • Contact the company at a number you have on file, or look it up online.  Find out if you really owe or not. Most of the time, you would’ve received something in writing first.

  • Report the number that called you to the Federal Trade Commission (  

  • Don’t answer their call.

If you accidentally do, tell them you know it’s a scam and to stop calling.  Be stern and try not to sound intimidated. If the scammer is convinced that you know it’s a scam, he’ll move on to someone else and won’t waste his time on you.

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