Last year we wrote a post titled 5 Rights You Have With Collection Agencies. The beginning of our second right was this sentence: “You have the right to ask them to prove you owe what they say you owe”. Turns out this is important advice and we’re going to tell you why.

Over the last year there have been some collection agencies that were fined for trying to collect on debts that didn’t exist. One of those companies, Expert Global Solutions, was hit with a $3.2 million fine for that and other illegal practices. In September, National Attorney Collection Services Inc was fined $1 million for the same, as well as representing themselves as a law firm and violating the confidentiality of those it was trying to get money from.

There’s two things most people don’t know about credit.

First, since most large companies get their money from insurance claims if they’re not paid, they’re getting paid a second time when they give these accounts to collection agencies, and they’ll do almost anything, including lie and harassment, when they’re able to earn anywhere from 80-92% or sometimes even more of their initial investment.

Second, it’s true that if you have something hit your credit report that if you don’t pay it in 7 years it falls off your credit report (well, not medical bills or anything owed to the government, but everything else). However, if a collection agency gets its hands on this stuff they can legally keep chasing you for the money.

One other thing collection agencies are counting on is your not having any record of an outstanding claim, thus feeling pressured and anxious when you get that sudden phone call. These days they’ll even call you on your cellphone, although if you tell them they’re violating the Telephone Consumer Protection Act and that you’re going to report them to the federal government they’ll probably hang up and leave you alone for a while because the fine they’ll get is sometimes higher than any money they get from you.

In any case, what happens sometimes is they’ve laid their hands on some paperwork and falsified a number, but you’ll never be able to investigate it for yourself if you don’t request anything from them. And sometimes when you request information, they’ll never call you again because they don’t really have anything to send you, since they have to send you not only proof of the outstanding debt but proof that the original company billed you for it.

It’s always wise to ask for proof whenever someone wants your money, but when it comes to collection agencies, who can hurt your credit, it’s critical to do.