How to Know if a Debt Collector Is Legitimate

Quick Answer

You can check the legitimacy of a debt collector by requesting their license number or asking for a validation notice.

Debt collector counts money while a nervous woman watches with clenched hands

If you've ever received a call from someone claiming to be a debt collector, you likely know how difficult it is to tell the difference between a legitimate collection and a scam.

You're right to be suspicious. In 2021, the Federal Trade Commission (FTC) shut down 17 debt collection operations for violating the law and barred them for life from working in the industry. The department also refunded over $4.86 million to victims of illegal debt collections.

You can tell if a debt collector is legitimate by requesting they provide their information, including their license number, so you can confirm it. You can also ask for a validation notice, which debt collectors are required by law to send to you.

Here's what you need to know to verify the legitimacy of a debt collector and what actions you can take when one tries to scam you.

How Do You Verify a Debt Collector's Legitimacy?

To start, ask your caller for their name, company, street address and telephone number. If your state requires debt collectors to hold a license, ask the caller for their professional license.

You can cross check the information on your state's database to ensure the debt collector has the legal right to collect debts. As an extra layer of assurance, you'll want to verify the company the collector works for is legitimate.

Here are some options to check the legitimacy of a debt collector:

If a collector isn't licensed in your state, ask them for a debt validation notice. Under the Fair Debt Collection Practices Act (FDCPA), a debt collector must provide specific information about your debt within five days of contacting you. The purpose of the letter or email is to give information that can help you determine if the debt is yours and how you can dispute the collection if it is not.

The validation notice must provide important information, including:

  • The names of the debt collector and the creditor on the account
  • The account number connected to the debt
  • The amount of the debt
  • A statement informing you of your debt collection rights

If, after reading the debt collector's notification, you believe the debt is illegitimate or inaccurate, you can challenge it by sending a debt validation letter and requesting the collector to provide clear evidence of the debt.

If you're unsure how to phrase your letter, the CFPB provides a sample letter as a reference. Make sure to state you want proof the debt is valid within the time frame of your state's statute of limitations.

Under the FDCPA, you must send your debt validation letter within 30 days of receiving your validation notice, and the collector must discontinue collection efforts until it provides you with written verification of the debt.

What to Do if You Suspect a Debt Collector Is Illegitimate

If a debt collector is legitimate and is attempting payment of an accurate debt, your best bet is to pay the debt in full. However, if your investigation concludes a collection attempt is illegitimate, take steps to safeguard your credit and your identity, such as:

  • Ceasing contact: Don't share sensitive information unless you're certain a debt collector is licensed and has legal permission to collect debts. Remember, scammers can use your personal information to steal your identity and wreak havoc on your finances with fraudulent accounts and charges.
  • Reporting the debt collector: Combat illegitimate debt collectors by filing complaints with the CFPB, the FTC or your state attorney general's office.
  • Calling your creditor: If you suspect a debt is accurate, contact your creditor and ask them how to proceed. If they've sold your account to a debt collector, ask them what collection agency is authorized to collect the debt.
  • Sending a cease and desist letter: If you believe a debt collector is fraudulent, you can send a cease and desist letter instructing the collector to stop contacting you. Send the letter by certified mail and request a return receipt to prove the collector received your correspondence. The FDCPA stipulates that debt collectors must obey cease and desist orders if the statute of limitations expires or if you don't have, or expect to have, any assets to make any court-ordered payments.

What if You've Already Paid an Illegitimate Debt Collector?

Scammers can be very persuasive in convincing you to send them money. If you've already paid a fraudulent debt collector, your best bet is to seek recourse with the bank or financial institution you used to send the money. For example, if you paid the illegitimate collector with a credit card or debit card, contact the bank that issued the card, inform them the charge is fraudulent and ask them to reverse the charges.

You may have a reasonable expectation of getting your money back if you paid by credit card or debit card, as federal laws protect you from fraudulent charges:

  • For credit cards: Under the Fair Credit Billing Act (FCBA), your liability is limited to $50, but most credit card companies offer zero-dollar liability protection, which means you're not liable for fraudulent charges. Once fraud is detected, the false charges are returned to your account.
  • For debit cards: The Electronic Funds Transfer Act protects your liability against fraudulent charges, but you must act fast. If you report the fraudulent payment within two business days, you may owe a maximum of $50. If you report the charge between two business days and 60 calendar days from the date of the fraud, your liability increases to $500. Once 60 days pass, your liability is unlimited, meaning your entire payment might be forfeited.

Pay Legitimate Debts and Verify Suspicious Ones

Receiving calls from debt collectors can be both unsettling and annoying, so it may be tempting to avoid them. But if the debt and the collection company are legitimate, the better option is to try to pay off your debt as soon as possible to avoid any harm to your credit. On the other hand, if you suspect a debt collector is illegitimate, seek to verify their license number and validate the debt using the steps outlined above.

One way to head off debt collectors is to check your credit report frequently and dispute any erroneous information you discover. You can also get free access to credit monitoring from Experian to receive alerts when information on your credit report changes.