It's important to spot the red flags tied to shady debt collection practices before they cost you money or peace of mind.
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If it feels like debt collectors are suddenly louder, more aggressive and more prevalent, you may be onto something. Credit card payment delinquencies have been inching higher recently, after all, as has the total amount of credit card and household debt, and charge-offs are ticking up, too. In turn, more old, unpaid accounts are getting sold to third-party debt collectors who tend to make their money by pressing for payment hard and fast. That combination tends to bring out the best and the worst of collection tactics.
Collection agencies are allowed to reach out to borrowers through calls, texts, emails and even social media messages — but not all of them operate within legal boundaries. The Consumer Financial Protection Bureau (CFPB) receives thousands of complaints about debt collectors each year, with many borrowers reporting issues with harassment, threats and deceptive tactics designed to extract payments quickly. These types of collection measures generally violate the laws that govern debt collection practices.
This type of behavior by debt collectors can cause significant stress and financial harm, especially to borrowers who do not realize they have rights and protections. So, what are the shady debt collection practices that borrowers should watch out for now? That's what we'll examine below.
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Shady debt collection practices borrowers should watch for now
Federal law offers you certain protections when you're dealing with debt in collections, but not every debt collector plays by the rules. Here are some of the most common shady practices showing up right now — and how to spot them:
Calling you before 8 a.m. or after 9 p.m.
Federal law prohibits debt collectors from contacting you outside of reasonable hours — specifically before 8 a.m. or after 9 p.m. in your time zone. If you're receiving calls early in the morning or late at night, that's a violation of the Fair Debt Collection Practices Act. Collectors may use this tactic to catch you off guard when you're tired or stressed, making it easier to pressure you into making immediate payments or sharing sensitive financial information.
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Threatening you with arrest or legal actions they can't take
One of the most common shady tactics involves debt collectors threatening arrest, jail time or legal consequences that they have no authority to impose. Debt collectors cannot have you arrested for unpaid debts (unless it's related to criminal fraud), and they can't threaten legal action unless they actually intend to pursue it and have the legal right to do so. If a debt collector claims law enforcement is on the way or that you'll be sued immediately, it's likely a scare tactic designed to force quick payment.
Contacting your employer, family, or friends about your debt
While debt collectors can contact third parties in certain cases to locate you, they're generally prohibited from discussing your debt with anyone else. If debt collectors are calling your workplace repeatedly, contacting family members to pressure you or sharing details of your debt with others, they're violating federal law. Debt collectors are allowed to contact your employer only to verify employment information or to enforce a court-ordered wage garnishment — not to harass you into paying.
Refusing to verify the debt or provide documentation
When a debt collector first contacts you, they must send a written validation notice within five days that includes the amount owed, the creditor's name and information about your right to dispute the debt. If a debt collector refuses to provide this documentation or can't verify that you actually owe the debt, that's a major red flag that could signal the debt has passed the statute of limitations, has already been paid or was never yours to begin with.
Using obscene language or making personal insults
Debt collectors are prohibited from using profane or abusive language, making threats of violence or harassing you with repeated phone calls intended to annoy. If a debt collector is cursing at you, making personal attacks about your character or financial situation or calling dozens of times per day, they're operating outside the law. This type of behavior is designed to wear you down emotionally and force you to pay just to make the harassment stop.
Claiming to be attorneys or government officials when they're not
Some of the more shady debt collectors will impersonate lawyers, law enforcement officers or government officials to add false authority to their demands. They may use official-sounding language or claim to represent courts or federal agencies when they're simply working for a collection agency. This deceptive practice is illegal and designed to intimidate borrowers into immediate payment without questioning the legitimacy of the debt.
The bottom line
Dealing with debt is stressful enough without facing harassment from debt collectors who violate your rights. If you encounter any of these shady practices, document everything. Keep records of calls, save voicemails and messages, and note dates and times of contact. You have the right to request that collectors stop contacting you entirely by sending a written cease communication letter. And, remember that you also have the right to dispute debts you don't believe you owe and to request validation before making any payments. Understanding these protections can help you navigate debt collection with confidence and protect yourself from illegal tactics.
Edited by Matt Richardson
