Protect yourself from debt collection scams

A new scam could be coming your way: Con artists posing as debt collectors and collection agencies.

Phony debt collectors probably predate recorded time, but these fraudsters are adding a sophisticated twist: They troll Internet databases for your personal or financial information, so that they appear to be "collecting" debts that you actually owe, making the scam that much more convincing.

Here's how it works: The scammer may say that she is collecting an American Express debt. You may actually owe money to American Express, so you may believe the caller works for American Express. Of course, the money isn't going to American Express at all. It's going to the scammer, along with any other funds the scammer can access through the financial information you provide.

You can also sniff out a scam by asking these three simple questions:

• What is your professional license number and the name, address, and phone number of the company you're calling from? Many states require debt collectors to be licensed. If the caller refuses or is unable to provide you with the information or you can't verify it with the state licensing agency, hang up. Even if the caller provides a phone number, stay suspicious. Real collection agencies have complex phone systems; if you call and a collector answers directly, he's likely using a cell phone, a sure sign of a scammer.
• Will you send me a "validation notice?" Even if the caller gives plausible-sounding answers, request a "validation notice" to verify the debt. The notice, which must be sent within five days of initial contact, must include the amount of the debt, the name of the creditor, and a description of your rights under the federal Fair Debt Collection Practices. The Consumer Financial Protection Bureau has sample request letters. Refuse to discuss any debt until you receive the notice. 
• What are the last four digits of the debtor's Social Security number? Legitimate debt collectors will never answer this question because doing so violates the Fair Debt Collection Practices Act (FDCPA). Even if the caller cites correct numbers for your bank account, credit card, or Social Security number, don't confirm them over the phone. Scammers can use the information to commit identity theft by charging your existing credit cards, opening new credit card or checking accounts, writing fraudulent checks, or taking out loans in your name.

Remember, even if the debt is legitimate, the person calling isn't necessarily entitled to collect the debt. Request a "validation notice" and hang up the phone. If you suspect the call was a scam, while you're waiting for the letter, report the call to the Federal Trade Commission.

— Catherine Fredman