Survey: 3 of top 4 scams involve credit
By Eileen Alt Powell
Associated Press
NEW YORK — With credit such a big part of Americans' lives, it should come as no surprise that it's a fertile field for fraud.
A newly released survey by the Federal Trade Commission found that three of the top four scams perpetrated on consumers involved credit.
The most frequently reported fraud involved advance-fee loan scams, in which a telemarketer or mass mailer promises a consumer a credit card or loan in exchange for an up-front cash payment; consumers pay the money but generally get nothing for it.
Other credit-related scams:
• Selling credit card insurance for hefty fees, despite the fact that federal law limits a consumer's credit card fraud liability to a maximum $50.
• Promising to repair a consumer's credit record by getting information removed from their credit report or by setting up a new one, sometimes with a bogus Social Security number.
"Those carrying a lot of debt are the ones most likely to respond to these frauds," said Pauline Ippolito, associate director of the FTC's bureau of economics.
Ippolito said victims included new immigrants, the very young and those from families who had little sophistication in financial dealings.
"The results (of the survey) will help us target educational and enforcement efforts nationwide," she said.
Still, it's often hard to catch the thieves because they set up shop, collect as much money as they can and then move on. Often, they work on the Internet, making them even harder to find,
"There are some excellent scam artists out there," said Linda Sherry, editorial director for Consumer Action, a nonprofit consumer education group based in San Francisco. "While we're sleeping, they're working on new ways to trick us."
When it comes to advance-fee loan scams, the best defense is consumer vigilance, Sherry said.
When it comes to clearing up a credit record, consumers should be especially skeptical if the promoter is suggesting something they shouldn't be able to do, like getting a new Social Security number, said Nicole Lowe, a consumer credit education specialist with TrueCredit, a company based in San Luis Obispo, Calif., that sells credit management services.
Scammers in this field often target consumers who have low credit scores from the major rating agencies — Equifax, Experian and TransUnion.
For those who haven't yet established credit, such as recent high school or college graduates, there are several steps they can take to get on the right track, Lowe said.
Some can qualify for a secured credit card. The way it works is that the consumer deposits money, say $300, in a savings account with a bank or credit union and is given a card with a $300 limit.
For those who have bad credit reports because they borrowed too much or didn't pay their bills on time, "you've unfortunately established yourself as a risk" and could have trouble getting more credit, she said.
