Credit Card Scam

We have received numerous reports of a credit card scam from people who have been offered credit cards secured by an automatic withdrawal from their bank accounts. The article below addresses what to watch for and how you can protect yourself.

How it happens:

The fraudulent company calls with a terrific pitch saying that you have been pre-qualified for a credit card. All that is required is a withdrawal from your account (they may call this a processing fee or a security deposit).

The fraudulent company then asks for the routing and account number from the bottom of your check (this allows the funds to be withdrawn from your account without your signature). Now all you have to do is wait for the credit card to show up in the mail. The only problem is that you never receive anything.

Warning Signs of a Credit Card Scam:

Remember being told "if it sounds too good to be true, it usually is"? This holds true with credit card offers. If you have bad credit, it's unrealistic to expect high credit lines or extremely low interest rates. Below are some other tip-offs that the offer may not be legitimate:

  1. The name of the company calling you is similar to a legitimate business. For example, Capital Choice is very similar to Capital One (the real business). Closer to home, there is a company calling themselves Credit Source, which is in no way affiliated or connected to 

  2. The sales pitch makes it clear that the offer is only good for today or for a limited time. Legitimate companies want your business and will extend offers over a period of time. 

  3. The company offers outrageous bonuses for signing up, such as a free vacation or computer. Real lending institutions usually don't. 

  4. There is no proof that the company really exists, such as a business license, physical street address, or verifiable phone number.

Protect Yourself From This Scam:

If you receive a telephone call offering you a fantastic credit card for a small fee ($297 doesn't seem small to me), ask the telemarketer for more information. Request the full company name, address, and telephone number.

If they offer you this information, then request that they send you an application and more information in the mail. Scam artists don't want to do this because it leaves a paper trail which would help establish mail fraud. If they refuse to send you the information in the mail, tell the representative that you need to think about the offer and ask for a telephone number so that you can call them back. Then hang up. 

Don't be pressured into making a decision over the phone. Scam artists use a sense of urgency to get people to give in. Don't fall for it.

Once you are off the phone, check out the company. Get on the internet and look them up. You can check with the Better Business Bureau to see if any complaints have been filed against the company. Also do an internet search for the number they gave you. If it isn't a legitimate company, there is a good likelihood other people will have reported the number as being linked to a scam.

True lending institutions have real people to answer the phones, or at the very least, an answering service that details business hours and contact information. Rip-off artists don't. Also check with your local Department of State to find out if the company is active and permitted to do business in your state.

What To Do If You Are A Victim:

If you believe you are a victim of a credit card scam, immediately go to your bank and talk to your account manager. Even if the withdrawal has not yet gone through, immediately close your account. Not only will this keep the scam artists from getting the original withdrawal, but it will also prevent them from making unauthorized withdrawals in the future.

If your money has already been withdrawn, you need to talk to the bank manager. It is important to do this within 60 days of the withdrawal. Explain that you have been a victim of a scam and that money was fraudulently withdrawn from your account. Request to have the unauthorized Automated Clearing House (ACH) transaction reversed immediately. Scam artists won't contest the ACH reversal because they don't want to get caught.

Most banks will cooperate with you and reverse the withdrawal, but if your bank doesn't, tell them that you wish to sign an "affidavit of unauthorized/fraudulent account activity". Also request the name and phone number of the third party processor who put the transaction through for the scam company. It will probably take the bank a few days to research and find the information.

Once you have the contact information for the third party processor, call them up and request a refund. This may or may not get your money back. If it doesn't, you can always consider filing a lawsuit. You'll have to decide if it's worth the time and effort at this point.

Reporting The Scam:

If you have been a victim of this scam, you need to report it. You can file a complaint with the Federal Trade Commission (FTC) online to alert the Federal authorities about the situation. It is also a good idea to contact the Attorney General's office in your state to report the scam. You can even call your local law enforcement agency to warn them that this scam is going on. Reporting the scam may not get your money back, but it will help others from being a victim also.


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