(WXYZ) – If you’ve been getting annoying phone calls about a debt you know you don’t owe, you’re not alone. Thousands of people have complained about these debt collection scammers to the Better Business Bureau.
On top of that, more than 100,000 people have lodged complaints with the BBB about debt collection companies – bona fide businesses that offer short-term consumer loans that advocates call a “debt trap”. .
Let’s start first with the crooks.
Dearborn Heights’ Christopher Nettleman is tired of fake debt collectors blowing up his phone.
“I started getting harassing phone calls last year claiming to be from BHA Services stating that I owed $900 on a debt from 2008,” he said.
He checked with his credit union directly and confirmed he owed nothing, but the calls and texts continued.
He reported it to the BBB scam tracker. Between 2019 and 2021, the Scam Tracker received over 7,800 reports of loan and debt collection scams with losses of $4.1 million.
“If you think you don’t owe anything and someone calls you and says you do, hang up,” said Melanie Duquesnel, president and CEO of the local Better Business Bureau.
She said she found scammers posing as payday loan companies or debt collectors arming themselves with stolen financial information to convince customers to pay. Schemers often use hard-to-trace sources like gift cards, payment apps, and money orders.
“They really tried to scare you. They really do. They use the tactic that if you don’t you’ll go to jail,” Duquesnel said.
Now let’s go to the legal businesses get a lot of complaints.
The BBB found that some payday loan companies, operating legally in 32 states, including Michigan, charge three-digit interest rate because laws aimed at combating predatory lending have been overturned in recent years.
“They say on their website that they can go from around 300% to almost 700% interest rates,” Duquesnel said, giving an example of a lending company getting lots of complaints.
A BBB study found many payday loan companies:
– offer interest rates calculated weekly or bi-weekly rather than annually.
– target people who need money and are unlikely to be able to repay quickly.
– Trap borrowers with stacking fees, three-digit annual interest rates and short-term repayment schedules.
From 2019 to 2021, the BBB received over 117,000 complaints against legal loan and debt collection companies with over $118 million in dispute.
So what can you do to protect yourself?
- If you are considering a short term payday loan, read the terms and conditions carefully before signing any documents. Understand what your interest rate and fees will be.
- If someone calls you saying you’re 10-15 years behind on debt, hang up. Contact your creditors if you are unsure of the amount you owe.
- Finally, never pay a debt through a payment app like Venmo or with a gift card. Any genuine creditor will accept traditional payment methods, including a check.
And if you feel like a scammer is trying to get your money…or a lending company is hiding exorbitant interest rates…report your concerns. You can file a complaint with one of these entities:
Better Business Bureau Scam Tracker
Federal Trade Commission (FTC)
Michigan State Attorney General
If you are late on a payday loan, the BBB recommends that you explore resources with the Consumer Financial Protection Bureau that may help you understand how debt collection works and what your rights are. You can also consider setting up a payment plan or working with debt counselors from Greenpath Financial Wellness, a Michigan-based nonprofit.