Most Common Scams Targeting Debt Collectors

Photo of a laptop with the screen partially closed.As with any service provider, scammers are out there — and debt collectors aren’t exempt from being targeted. In our case, The “prospective client” found us online, how many clients find us, perhaps as the result of researching a topic and finding one of our 320 articles through Google

The prospective client, an architect, contacted us to handle an account. The architect claimed they worked on residential property in the West Village and were owed $162,000.00.

The architect said they were located in the U.K. The website was difficult to find but we located it. The debtor, a homeowner in the West Village was the registered owner of the property. The architect said they met the homeowner while on vacation and did business together. It seemed plausible enough that we took the case. There was a contract and supporting documentation. The debtor, however, did not live in the townhouse but uptown.

The requisite demand letter was sent out. Within a week, we received an official bank check for the full amount of the claim attached to our demand letter. The debtor sent the payment via FedEx from their uptown address.

If Something Is Too Good to Be True…

In my 30 years as a debt collection attorney, we have never had a check for $162,000.00 come in as the result of a letter without a call, communication or an offer to negotiate. 

Before depositing the check, I walked into Chase bank and learned the official check number was used and the check invalid. Our contact and case with this creditor stopped right there.

What happened to us seems to be one of the most popular scams targeting debt collection attorneys. Checks go to debt collection attorneys. The lawyer deposits the check and the client asks them to remit the net of their fees. The lawyer complies, sending the remittance to the client only to realize the check was fraudulent. The debt collection lawyer paid over the net amount of the claim to the scammer.  

Most Common Scams Targeting Debt Collectors

You can protect yourself from scammers by familiarizing yourself with some of the more common scams out there. Some scammers will try to place a claim that they, the creditor, do not have a legal right to collect. This person may then pose as the creditor in an attempt to see the scam through. 

Other times, someone establishes a “business” with a name like a real creditor  They obtain a listing of some or all the real creditors’ clients and receivables. They then contact the debt collection attorney with the information to say they can document the transaction. The claim then goes to collection, and because the underlying debt is valid, the customer often pays. Remittance goes to the fake client by wire or check to a PO Box.

How to Tell If It’s a Scam 

Concerned your prospective client is just a scammer in disguise? Here are some red flags to keep an eye out for.

Scammers try to lure debt collection lawyers by offering favorable fees, far beyond what is customary in the industry. They request authorization to automatically debit a lawyer’s trust account for monies collected on their case(s) by ACH or request disbursement of funds that could not have cleared.  

They may also use an account not related to the domain of the business or try to collect a debt that has already been paid.

We often hear about scams perpetrated by debt collectors on others. However, lawyers, especially debt collection lawyers, are targets for scammers because they hold monies in trust for creditors making them the perfect prey.