How to Protect Yourself From Fake Debt Scammers

ABC News investigation finds phony debt collector ring targeting Americans.

June 8, 2012 — -- "You will be behind the bars for six months and once you go behind the bars, you will lose your job. Once you are behind the bars, you won't get a single drop of water."

That's the message received by just one of hundreds of thousands of cash-strapped Americans who authorities say have become the targets of a "phantom" debt collection scheme in which victims are bullied and threatened into paying conmen money they do not owe, as reported in an ABC News "Nightline" investigation.

"They call up and they pretend to be policemen... sometimes they've been from the FBI or the Department of Justice," said Jon Leibowitz, chairman of the Federal Trade Commission. "So it is just a hardcore kind of scam and we're beginning to see more of it."

WATCH FULL REPORT: Phantom Debt Collectors From India Harass Americans, Demand Money

But there are steps consumers can take to make sure their money is safe the next time the phone rings. Check out the tips below and head to the Federal Trade Commission website for more.

Spotting a Potential Conman

Just because the caller says he's an authority figure, that doesn't mean he is. According to the FTC, there are several ways to tell if someone may be trying to pull one over on unsuspecting callers. Keep a lookout for the following red flags:

First, does their story make sense? Are they asking you about a debt you don't recognize in the first place?

Be suspicious of anyone claiming to be law enforcement. "The police, the FBI, the Justice Department probably never enforces payday loan collection," Leibowitz said. "They're not debt collectors." Also, Leibowitz said to be on the lookout for clues about the caller. "If someone is calling themselves Officer Mike Johnson and they're speaking with a thick Indian accent, I suppose that would be a red flag."

The caller won't give you ways to reach him such as a mailing address or phone number.

The caller asks you for personal financial information -- that a legitimate figure would likely not have to ask for -- or threatens you with legal action if you do not pay.

If You Think You're the Target of a Scam...

First things first, the FTC says to ask for the caller's name, company, address and phone number and for a "validation notice" detailing the debt owed. "If a caller refuses to give you all this information, do not pay!" the FTC says.

Do not provide any personal information over the phone. If you do, that information could be used by thieves for identity theft.

Tell them to stop calling and, if you have an address for them, ask them to stop calling in writing. By law, real debt collectors must stop calling if you request that in writing, the FTC says.

The most obvious course of action, Leibowitz said, is to call up your actual creditor. "If a consumer knows they have debt, call the debtor up. The debtor can can you, 'Yes, I called.' or 'No, that was somebody else,'" he said.

Report the call to the FTC and state authorities. "Many states have their own debt collection laws" in addition to federal ones, the FTC says. "Your Attorney General's office can help you determine your rights under your state's law."

"The thing we wanted to do first and foremost was we wanted to shut this operation down," Leibowitz said.

CLICK HERE to visit the FTC's website.

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