Beware of Phantom Debt Collectors

Bad Actors Use Scare Tactics to Net Millions

In late 2024, the Federal Trade Commission (FTC) took action against a debt collector in the state of Georgia, reportedly using fear and harassment to fool several individuals into paying off debts that either didn’t exist or that the company was not legally allowed to collect. The fake debts targeted by this company alone amounted to $7.6 million.^1,2

The FTC then filed a complaint against the Georgia-based company in federal court, which temporarily halted the company’s operations and turned its assets over to a court-appointed receiver. This is one case of many, but it shows that phantom debt collectors pose a very real threat, and authorities will take action to bring these bad actors to justice.¹

Phantom debt can be defined as any entirely fake debt, a debt that has already been paid or discharged, or a debt has been falsely inflated. The threat of fake debt collection has become so widespread that multiple states have established outreach programs and websites encouraging their constituents to look for these scammers. While there are still real debt collectors operating honestly and legally, phantom debt collectors that target individuals or their family members are too often mistaken for the real thing.

If you suspect a scammer, the best thing to do is seek help and report the incident to the FTC. The following chart outlines the massive recent increase in reported collections calls. Given this sharp increase in reports about debts not owed and abusive or threatening practices, phantom debt scams are clearly on the rise.³

How Can I Tell It’s a Phantom?

Scammer Tactics and Techniques 

So how do you know if a debt collector is legitimate, or if they just want to scam you out of money you don’t owe? Here are some telltale causes for suspicion.^1,2,3

1. They use threats or alarming language. Real debt collectors don’t make empty threats; they just ask you to pay what you owe. Scammers will try to scare you with things like:

• Arrest or jail time
• Wage garnishment
• Lawsuits or other legal action

2. They harass or intimidate. Scammers are relentless. They seem to have nothing else to focus on but you and your debt–which may be true! They might:

• Call you repeatedly
• Claim to have your sensitive personal information
• Leave multiple voicemails or messages
• Contact family members, even after they have been in touch with the alleged debtor

3. They disregard regulations. The Fair Debt Collection Practices Act (FDCPA) exists to regulate legitimate debt collectors, so you can tell a scammer when they:

• Don’t identify themselves as a debt collector
• Use threatening or harassing behavior
• Misrepresent or lie about debts

The Federal Trade Commission exists to protect you and hold these harmful entities accountable. If you suspect you are the target of a phantom debt scam, visit ReportFraud.ftc.gov immediately to file a report. 

<sup>1. FTC.gov, November 4, 2024.
2. FTC.gov, August 19, 2025.
3. Office of the Attorney General for the District of Columbia, August 19, 2025.</sup>