As Halloween approaches, the Better Business Bureau (BBB) is warning consumers about one of the most frightening scam types out there — zombie debt, also known as debt collection scams. Victims often report that scammers harass them for weeks or even months, both at home and at work, trying to get them to pay a debt they don't even owe. These 'zombie,' or 'phantom' debts seemingly appear out of thin air, and BBB receives numerous reports throughout the year as con artists proverbially "put on a new disguise," or rather change tactics, to steal your hard-earned money. How it works The scammer calls and says that they work for a loan company, law firm or government agency, and claim to be collecting an overdue payment.
After replying that you don’t owe money, the "debt collector" starts threatening to file a lawsuit, have wages garnished, issue an arrest warrant, or arrange for a court appearance.
All of these claims are nerve wracking, leaving the person answering the phone rattled and unsure. They may even begin considering that perhaps they do owe money after all. The first thing to do is to stay calm. Despite the threats, these alleged "debt collectors" don't have any legal power. In most cases, the alleged overdue loan doesn't even exist. Don't give in and pay money you don't owe, otherwise they'll call back for more. The "Good Cop" version An unsolicited call comes through from a debt collection agency. The caller claims there is an unpaid debt from long ago that is about to go to court. The caller is speaking politely at first and appears to have your best interests at heart. They seem to sincerely want to help you avoid a court date. To fix the situation, all you need to do is make a reasonable or 'good will' payment, perhaps even divided up into several installments. No matter how kind the caller seems, don’t fall for it. If you make the payment, the person you spoke to on the phone will take the money and disappear. Any future efforts to contact them will be in vain. 'Zombie Debt' Collector Take on Another Tactic A Vancouver woman says a zombie debt appeared in the form of a collection letter at her home back in November 2021, according to her report submitted to the BBB Scam Tracker. The letter, claiming to be from Enterprise Rent-A-Car, said she had a debt of more than $15,000 due to damage to a rental car. Although the woman was initially worried as she had rented vehicles from Enterprise before, she quickly realized that she neither rented that specific car or was in the city they claimed she was in for the date noted. She threw out the letter shortly thereafter. The Stats On average, victims lose $100 when involved in a debt collection scam. The age demographics that most commonly fall for debt collection scams are 18-24 and 55-64. Out of all potential scams, debt collection scam occurrences are quite low (1.05 per cent) compared to online purchase scam occurrences (35.54 per cent). Although they are more rare, it’s important to be prepared when you come face to face with a zombie debt. The BBB has provided the following tips on how to deal with debt collection scammers:
- Ask for proof of the debt and of the agency calling
- If you do owe money and aren’t sure if the caller is real, ask for their name, company, street address, and telephone number. Do not provide any bank account, credit card, or other personally identifiable information over the phone. If the collector is legitimate, they should have details on the accounts in question. Ask how you can contact them and call them back once you've verified the details they provided (if they had any at all). A legitimate debt collector will have a way for you to contact them.
- Check your credit report
- Check with Equifax Canada or TransUnion, two major consumer credit bureaus in Canada. This will help determine if there are outstanding debts that have hit your credit card already or if there's suspicious activity. If you’ve already given out your personal information, place a fraud alert on your credit report.
- Ask when the debt was first owed
- B.C. has a two-year basic liability limitation period. This means that if it has been two years (or more) since you incurred the debt, made a payment on the debt, or acknowledged the debt – the creditor who is owed the money can no longer take legal action against you, in an attempt to get you to pay. If you do end up truly owing a debt, be aware that your credit score will be negatively affected.
- Just hang up
- If you run a tight spreadsheet with all your costs and expenses and wholeheartedly know that you don't have any outstanding loans, hang up. Don’t press any numbers or speak to an “agent.”
Remember that while most debt collection agencies are legitimate, there may be times when a scammer is phishing for information.
If you encounter a scam, you're encouraged to report it to the BBB's scam tracker, or the Canadian Anti-Fraud Centre.
For more information, you can also visit the BBB's website.
