In today's cash-strapped economy, many Americans are dealing with high levels of debt. When debt goes unpaid, collection agencies begin to call, and sometimes their collection methods can be downright frightening. Struggling consumers need to know their rights and what to do should they encounter a collection scam. Some collection agencies will go to any length to get their money, and they are not above scaring consumers out of their money. Here is a look at five unethical collection scams that consumers need to be aware of.

Collecting on an Old Debt
A common collection scam that gets reported year after year is debt collectors attempting to sue you on an old debt that is beyond your state's statute of limitations. You may still be obliged to pay the debt, but you won't be taken to court over it. The only action collectors may take is to report the old debt to the major credit bureaus. While it is sometimes important to pay off your old bills, it should be noted that according to the Fair Debt Collection Practices Act, collectors who threaten to sue you over a delinquent debt are in violation.

Junk Debt Buyers
Another common collection scam that many Americans fall prey to is offers to pay down an old debt that is nearing the statute of limitations. By accepting the discounted price, the statute of limitations is renewed, and the collection agency can continue to bill you for the remaining owed balance. If you are contacted by a junk debt buyer, never give out your Social Security number, bank account information, credit card number or any other private information. Any legitimate collection agency will have your identifying information. At most, only verify the last four digits of your Social Security number, your name and your address.

Debt Tagging
Debt tagging is a practice in which collection agencies will link a debt to someone without verifying their identity first. For example, Bob Smith from Jacksonville, Fla. has incurred a debt of $1,000. ABC Collections searches the public record for a Bob Smith from Jacksonville, Fla., and they link the account to the individual they think fits best. This practice can result in the wrong person's credit being affected. Debt tagging is one of the reasons why it is so important to review your credit report annually.

Unethical Re-aging
Another unethical collections practice is the re-aging of accounts that have exceeded the statute of limitations. These debts are not being written off, but instead are continuing to affect consumers' credit reports even after the seven-year limitation. Re-aging the account makes the bad debt appear more recent, causing the consumer's credit score to plummet.

Threats to Prosecute with Criminal Charges
Another highly common and often frightening scam occurs when collection agencies threaten to take legal action against consumers. Threats of prosecuting a consumer with criminal charges such as fraud, grand theft, check fraud and the like are illegal and should be reported to the Fair Trade Commission (FTC) immediately. Consumer-related issues are not punishable in a criminal court. These threats are an aggressive scare tactic that some collection agencies use to get their money. Make sure you keep debt collectors at bay by not falling for it.

The Bottom Line
As a consumer, it is important to understand your rights. While collection agencies just want to settle a debt, they have to follow the laws set by the Fair Trade Commission under the Fair Debt Collection Practices Act, and under no circumstances are they allowed or permitted to threaten or harass you. If you think you are being scammed, threatened or harassed by a collection agency, you can contact the Fair Trade Commission at 1-866-653-4261.

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