We live in a society centered on credit, which means most of us carry some type of debt—whether it’s a car loan, student loans, a mortgage, or a credit card balance. Scammers know this and often try to exploit our debt culture by saddling people with so-called “phantom debt,” invented by fake collectors hoping to scare you into paying. To scare them instead, you can tell the caller to comply with the Fair Debt Collection Practices Act and communicate with you only in writing. You can also request a formal “debt validation notice” to confirm whether the debt is legitimate.
Halloween may roll around once a year, but creepy criminals who pose as “phantom,” “ghost,” or even “zombie” debt collectors strike year-round.
In fact, debt collection is so lucrative for con artists that the United States Congress passed the Fair Debt Collection Practices Act. Here’s how to use that law as your shield while you ward off the bad guys.
What are “phantom, ghost, and zombie” debt collectors?
When a bill goes unpaid after a prolonged period of time, the company that’s owed the money might hire a debt collector to seek repayment on its behalf.
And real debt collectors are busy: In 2025, the U.S. Census Bureau noted that debt collectors rake in about $15 billion each year, and that there are about 2,500 debt collection agencies in America. As for how much Americans owe, in November 2025, the Federal Reserve Bank of New York reported that the total was $18.59 trillion.
With those numbers, it makes sense that scammers would be attracted to such a giant playing field. After all, most Americans are already anxious about bills, and debt collectors fan the flames of anxiety.
“Phantom debt collectors” are real people chasing after debts that don’t actually exist. On the other hand, “zombie debt collectors” is a subset of the phantom debt collector category. While phantom debt is entirely fictitious (its victims never actually accrued the debt they are accused of), zombie debt is debt that a person once legitimately owed. Whether that person paid the debt off or if it was forgiven, a zombie debt appears to have—like a zombie—risen from the dead.
Signs of a debt collection scam
The Fair Debt Collection Practices Act (FDCPA) outlines strict rules for how legitimate debt collectors must behave. If the person contacting you violates these rules, they may be breaking the law—or they may not be a collector at all, but a scammer.
Before you feel pressured to pay, ask yourself whether the collector:
Pressured you for payment of a debt that you never incurred
Contacted you at odd times or at your work
Harassed or hounded you with communication
Made unmerited threats of legal action
Told others (like your employer or family members) of your supposed debt
Pretended to be with law enforcement or from a federal or state agency
Used obscene language or threatened you with violence
If any of these sound familiar, you may be dealing with a debt collector scam.
How to scare off scam debt collectors
During their initial contact with you, a debt collector is required by law to share a validation notice. These notices let you know to whom you owe money, how much, and how to dispute any debt.
If they don’t give you one from the get-go, or at least within five days of that first contact, they could be cooking up a con.
To scare off a phantom debt collector or force a real debt collector to honor your rights, try these tips:
Request a written validation notice.
Share that you will only communicate over email or by traditional mail.
Dispute the debt in writing.
Ask for their financial license number (and search for it here).
The Consumer Financial Protection Bureau (CFPB) advises that you act within thirty days of the debt collector’s initial contact. Wait longer than that, the Bureau warns, and if the debt is legitimate, you could be in legal trouble. Use these sample letters from the CFPB to dispute claims.
What if I fell for a debt collection scam?
In November 2024, the Federal Trade Commission (FTC) accused a Georgia-based debt collection agency of bilking consumers out of $7.6 million of phantom debt. They were able to take action against the scammers in part because victims spoke up. If you’re an Allstate Identity Protection member affected by any type of scam, contact us right away. Our team can guide you through the next steps based on your specific situation.
No matter what, it’s important to alert the proper authorities. Reporting these scams not only helps protect you, but it also helps prevent others from becoming victims. You can report debt collection scams by:
Submitting a complaint to the CFPB
Filling out a report with the FTC’s fraud department
Beyond reporting the crime, take steps to strengthen your identity and financial protections after a scam:
Generate a fraud alert with one of the credit reporting agencies: Experian, Equifax, or TransUnion. (Contact one agency, and they will share the alert with the other two.)
Freeze your credit with the credit reporting agencies.
Dispute any false claims on your credit report with the three credit reporting bureaus.
Contact your financial institutions and alert them of the fraud.
Change your login credentials and enable multi-factor authentication.
Falling for a debt scam—or any type of scam—can feel overwhelming, but know that you’re not alone and you can recover. Acting quickly, reporting what happened, and tightening your security can help you regain control.