Debt collection is big business. And like any big business, there’s plenty of room for corruption. For example, several firms are under investigation for doing illegal things – like threatening to have you arrested, implying that they can seize your property, and even claiming they’ll dig up someone’s grave over unpaid funeral bills! Here’s what you need to know to protect yourself from unscrupulous debt collectors:

  • Collectors can’t make threats, swear at you, or lead you to believe that they’re attorneys.

  • Debt collectors are required to provide you with a written “validation notice” documenting the unpaid debt within 5 days of their first phone call. A validation notice states how much you owe, and who it’s owed to. The letter also has to say that you have 30 days to dispute the charge. But some debt collectors bury that in the fine print, hoping you won’t see it.

  • If you don’t owe the money: Send a dispute letter by certified mail, return receipt requested. Companies aren’t allowed to contact you once they receive the dispute letter, so that’ll put an end to the annoying phone calls. But consumer rights experts say that if you don’t get a receipt, a lot of collection agencies will pretend they never got it – and just keep calling.

And there’s one more debt-collection scam to look out for, thanks to a warning from Tom Pahl, who’s the assistant director of the Federal Trade Commission. He says the scam involves stealing actual account information from real creditors and pretending to be legitimate debt collectors. But once you pay up, the crooks disappear, and you’re still on the hook for money. So, if you get suspicious phone calls about money you owe, hang up, look up the number, and call the company you owe directly. That way, you can make sure you’re dealing with someone legit. And remember: If you think you’re being treated unfairly or you’re the victim of a scam, file a report with the Federal Trade Commission, and your state attorney general.