What is Phantom Debt?

Earlier this year, the Federal Trade Commission (FTC) brought a lawsuit against six companies believed to have created a major collections scam. These companies allegedly gathered a large amount of personal data from many consumers and used it to collect money that was never actually owed. The scam carried on for nearly 5 years, and the companies were able to pilfer $3.8 million from more than 1,000 consumers.

A phantom debt is a debt that doesn’t actually exist. An especially unscrupulous individual or company makes up a fictitious debt in order to try to collect on it. Companies like those being sued by the FTC collect personal data to use as leverage in an attempt to threaten damage to a consumer for failure to pay. Harassing telephone calls from a collection agency can be embarrassing and intimidating. Consumers often think it will be less of a hassle to just pay what they are told they owe rather than research confusing debts.

How to Find out If Your Debt is Real or Phantom Debt

As a consumer, it is not in your best interest to simply take what a collection agency says at face value. The Fair Debt Collection Practices Act (FDCPA), was created to protect your consumer rights and keep you from being wrongfully harassed by debt collectors. If you are contacted regarding a debt you allegedly owe, the FDCPA gives you the right to request a validation of debts. The validation will show, among other things, the debt owed and the original creditor to which it was owed. If you dispute the debt, the debt collector has 30 days to provide verification of the debt and to show that it is the legal owner of the debt. If the debt collector cannot prove this information, then they cannot continue to collect on the debt.

Requesting validation of the debt being collected is an important tool for consumers. It allows you to make sure the debt is real, the debt is actually owed by you (as opposed to other consumers whose personal information may be similar to yours), and that the debt has not already been paid off. It is not uncommon for consumers to discover errors when they are contacted in regard to a potential outstanding debt. A smart consumer will always double-check the information being provided to ensure the debts in question are not phantom debts.

Another way to avoid paying a phantom debt is to regularly check your credit report. A debt that doesn’t actually exist will not show up on your credit report. If you are being requested to pay a past due amount that has never been reported to any of the credit bureaus, you might be a target of a phantom debt collector.

Contact an Ohio Consumer Law Attorney

If you suspect a collections agency is trying to make you pay a debt you do not owe, don’t give them any money. Instead, review the suggestions outlined in the FDCPA, or contact an Ohio consumer law attorney. The attorneys at Luftman, Heck & Associates have years of experience helping consumers end harassing calls and despicable behavior from collection agencies. To schedule a free consultation, call (888) 726-3181 or emails us at advice@ohiodebthelp.com.