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Beware of Debt Collection Scam

Fake international companies may be attempting to commit fraud by remitting payment to unsuspecting collection agencies via fraudulent cashier’s checks.

The debt collection industry has been subject to a number of scams over the years. Recently, the Association of Credit and Collection Professionals (ACA) was alerted to a scam originating in Toronto Canada. It appears organized crime out of Toronto Canada is attempting to perpetrate fraud on collection agencies by placing large accounts for collection through fake international companies and remitting payment to unsuspecting agencies via fraudulent cashier’s check drawn on Citibank.

The perpetrators of the scam claim to be international clients with large commercial accounts (about $900,000) which need to be placed for collection. The client and the commercial customer appear to be legitimate companies with Web sites and accounts that seem to be substantial. Shortly after the account is placed for collection, the customer offers to pay a large amount of the debt owed (about $550,000) and a cashier’s check is mailed to the collection agency from the customer for the agreed upon amount. However, the customer’s check is not valid.

The perpetrator’s goal is to extract the amount listed on the false cashier’s check from the collection agency’s trust account before the check is discovered as fraudulent. Additionally, the perpetrators try to gain access to the collection agency’s account by using the account numbers listed on the back of the check.  

Banks and collection agencies are advised to be on alert for fraudulent practices. Carefully reviewing all checks before depositing them, especially those written for substantial amounts, is strongly recommended. Fraud such as this could be devastating for a collection agency.

If an agency suspects they have been a victim of fraud or suspects that fraudulent activity is taking place, the agency can contact their bank, their local Federal Bureau of Investigation office, the Secret Service, the local Better Business Bureau or the state Attorney General.