Credit Fraud and Credit Scams - Don't Become A Victim!
FACT #1
Credit fraud and scams have been around as long as there has been credit
FACT #2
Anyone is vulnerable, but certain people are more vulnerable
FACT #3
You dont have to be one of them!
Credit fraud is designed to steal money from your bank account or credit cards. Part of that may or may not be identity theft but often they go hand in hand. Credit scam artists appear honest and trusting thus getting you to drop your guard. Once they have done that they very smoothly move in for the kill. Here are some of the major scams currently going around:
Email Scams Offering Pre-Approval On A Loan
Heres one that I have been receiving all week in my inbox:
Leslie,After Checking your new records, you've been overpaying by many points. Our office can help you lower that nowhttp://www.randomemailaccount.com
This is not a pre acceptance, you have already been confirmed. Best Respects,Kelly Bartlett
I have not applied for any loans recently, and I use the credit protection service, so I know that nobody has pulled my credit.
This is an obvious credit fraud scam because I've received about 12 of them over the past week - all from different emails, but always the same message. But some people desperate enough might check them out and get suckered.
Heres How To Know If An Email Is Credit Fraud
Red Flag #1 Offering a large loan with no credit check.
Red Flag #2 Once you respond they will offer to transfer the money directly into your bank account
Red Flag #3 They tell you that they need a certain amount of money by Western Union wired that day, promising you the loan to your bank account by the next day.
Red Flag #4 Some of these lenders have 900 numbers and you can get charged $15 to $25 for the call, which they dont tell you about at the time of the call!
File Segregation
This is a type of credit fraud scam that could get you fined or sentenced to jail time if you use it. It is an illegal scheme used by some credit-repair companies to encourage consumers with bad credit to obtain new taxpayer identification or employer identification numbers from the IRS and use them to hide their true credit identities from creditors.
For a fee, these companies promise advice on how to go about segregating your credit files. File segregation is illegal and consumers who employ it are committing a felony. Let me assure you now, 1-800BadCredit offers credit repair services but they are legitimate credit attorneys and consultants that you can trust.
Loan Flipping
While not technically "credit fraud" because your credit or identity is not stolen. This is a financial scam that exploitative lenders may use to take advantage of the borrower by repeatedly talking the borrower into refinancing a loan.
These loans contain lenders fees, so every time you flip the loan they collect a huge fee (built into the loan). Which in turn increases your overall debt and payments. Many people have lost their home because of schemes like this because the excessive fees added to the loan increased their payments beyond what they could afford.
Heres An Old Credit Fraud Scam That Is Coming Back Around
It works like this: Person calling says, This is Carl Patterson and I'm calling from the Security and Fraud department at MasterCard. My Badge number is 53928. Your card has been flagged for an unusual purchase pattern, and I'm calling to verify. This would be on your MasterCard card issued by XYZ Bank. Did you purchase an Anti-Telemarketing Device for $497.99 from a marketing company based in Arizona?
When you say No. The caller continues with, Then we will be issuing a credit to your account. This is a company we have been watching and the charges range from $297 to $497, just under the $500 purchase pattern that flags most cards. Before your next statement, the credit will be sent to (gives you your address), is that correct?
You say, Yes. The caller continues... I will be starting a fraud investigation. If you have any questions, you should call the 800 number listed on your card 1-800-MASTERCARD and ask for Security. You will need to refer to this Control #. Then he gives you a 6 digit number.
The caller then says he needs to verify you are in possession of your card. Turn the card over. There are 7 numbers; the first 4 are 1234(whatever) the next 3 are the security numbers that verify you are in possession of the card. These are the numbers you use to make internet purchases to prove you have the card. Read me the 3 numbers. Then he says That is correct. I just needed to verify that the card has not been lost or stolen, and that you still have your card. Do you have any other questions? Don't hesitate to call back if you do.
Now that they have obtained your 3 digit code on the back they can make charges to your card without your authorization! So on the next statement youll see the $497 on it, but you think, well, he did say they were reversing it. So you wait another month and your statement comes, and instead of a reversal theres a second charge for $497 and maybe even a third one! By this time youll have contacted your credit card company and shut down your card, but good luck getting the money back! The credit card company may fight you on it, because the original charge is now over 30 days old.
Now you may wonder how they got your credit card number. Most likely from some statement you threw away. Every day there are people who make a nice living just going through peoples trash. Make sure you shred all documents with credit card numbers or your social security number on it or you could become the next victim of credit fraud!
Guarding Against Credit Fraud
Do Sign your cards as soon as they arrive
Carry your cards separately from your wallet, in a zippered compartment, a business card holder, or another small pouch
Keep a record of your account numbers, their expiration dates, and the phone number and address of each company in a secure place
Keep an eye on your card during the transaction, and get it back as quickly as possible
Write Void on incorrect receipts or shred them
Destroy carbons
Save receipts to compare with billing statements
Report any questionable charges promptly and in writing to the card issuer
Notify card companies in advance of a change in address
If you think you're a victim of credit fraud contact a credit attorney immediately!
Don't: Lend your cards to anyone
Leave cards or receipts lying around
Sign a blank receipt. When you sign a receipt, draw a line through any blank spaces above the total. For instance, when you buy fast food often the receipt contains a line for a tip. Dont leave this line blank! Put $0 in it and write the total below, as if you were writing a restaurant receipt. This way someone cant fill in the tip column for you and collect some extra cash in their pocket!
Give out your account number over the phone unless you're making the call to a company you know is reputable
Reporting Losses and Credit Fraud
If you lose your credit or charge cards, or if you realize they've been lost or stolen, immediately call the issuers before you become a victim of credit fraud and have to go through the nightmare of fixing your credit! Many companies have toll-free numbers and 24-hour service to deal with such emergencies. Once you report the loss or theft, you have no further responsibility for unauthorized charges. In any event, your maximum liability under federal law is $50 per card.
If you suspect credit fraud, you may be asked to sign a statement under oath that you did not make the purchases in question.
Portions of this article were taken from:
http://www.ftc.gov/bcp/conline/pubs/credit/cards.shtm
http://urbanlegends.about.com/library/bl_credit_card_fraud.htm
http://1-800BadCredit.com
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