Credit Card Scams

Your credit card holds mighty power, and there are some bad people who would like to take some of that power. Credit card scams cover a wide variety of bad acts. Identity theft was the top consumer fraud complaint received by the Federal Trade Commission in 2007. Within the complaints regarding identity theft the number one form of identity theft involved credit card fraud. While it may seem like innocent marketing to you, even legitimate credit card companies will attempt to scam you. Anyone receiving a credit card will also be inundated with sales materials and phone calls inviting you to purchase credit insurance. While this may be a good idea at times, one of the worst forms of credit insurance involves buying protection in case a card is stolen and the thief runs up a big bill. But federal law already protects card users. Consumer liability is capped at $50, and it is rare to have a credit card company even ask for that money if you have promptly reported the card missing or stolen. So, to ask you to buy credit insurance against the possibility that your card is stolen is surely a scam. Another scam involves phony credit card issuers. Some scammers will promise credit cards with some pretty good-sounding terms. There's just one catch: the only way you get that card is via a fee paid in advance, which they ask for to help process the paperwork or "to get you pre-approved" or some other bogus proposition. Once you've paid the fee, you won't hear from them or be able to find them again. The main target of advance-fee scammers is a person who is desperate for a card with great rates and terms. That is, someone who can least afford to lose money. One alternative scam from telemarketers is to tell a desperate and uninformed victim that they don’t qualify for credit but that they can set up a debit card for their use those functions just like a credit card. They ask for your checking account information or another form of payment so that they can set up the account, but once again the card never arrives. Older consumers are particularly targeted by telemarketing cons. Scammers attempt to find seniors who are trusting, looking for human contact, and in search of needed funds or a special deal. If you have older relatives whom you think might be prey for telemarketers or other scammers, have a talk with them about never giving out credit card, checking account, or other personal information like their social security number. One piece of information that scammers increasingly want is the security code on the back of your credit card in the signature strip. This is a three digit code that seems harmless and insignificant, but if the rest of your account information from a theft of data, or from a store or restaurant receipt, the security code is the key that unlocks your credit card for online purchases. Often the security code is asked for as part of a “security check” by a phony “Fraud and Security” department claiming to be from your credit card company. These people have already got your credit card number and expiration date. They’ll sound official and stern and tell you that some phony charges may have been applied to your card. They’ll tell you that they don’t want you to repeat EVER your credit card number, even to them, but to prove that you have the card in your possession they’ll ask you to give them the three digit security code from the back. Your credit card company will never ask you to do this. These are scammers trying to get the missing piece of information from your card. The variations on these scams are endless, so be aware, and practice common sense. Don’t every give your social security number, mother’s maiden name, or account numbers to anyone who calls you. People may sound official and claim to be from your bank, credit card company, or the IRS, but if they call you, don’t give them any information. Only trust people when you have called them, and only if they are associated with a credit card or bank you have a relationship with. Don’t call numbers that come to you in mailed solicitations and offer them personal information. Most legitimate businesses don’t operate in this way, and it’s a very dangerous habit for a consumer to get into. Most of all, if you get offers that seem too good to be true, or generous in ways that other marketers can’t match, they probably are too good to be true.