Why that Great Credit Card Offer Could Be a Scam

10 steps to avoiding a bogus credit card offer: Internet Scambusters #600

Can you spot the difference between a genuine credit card offer and a scam?

We’ve got 10 things you should be aware of in this week’s Scambusters issue, plus information of what to do if you have bad credit.

And in our Alert of the Week we highlight another phony credit card deal — this time one that comes with bogus airline tickets.

Let’s get started…

Why That Great Credit Card Offer Could Be a Scam

It’s a pretty safe bet that at some time in the past year — and lots of times before — an enticing credit card offer has dropped into your mailbox, either online or at the end of your driveway.

And you’ve probably had your share of telesales calls offering you similarly “great deals.”

Some offers, especially the snail-mail variety, come from genuine card companies — and mostly they end up in the trash (after being shredded of course — you do shred them, don’t you?).

But some are simply bogus, while others, even if “genuine,” impose such restrictions on the user as to render them worthless.

Often they bear a name you’ve never heard of, or one that sounds similar to, but is slightly different from, a well-known brand.

Usually too, they offer a great deal, like rock bottom interest rates or guaranteed acceptance, even if you have a bad credit record.

That makes such cards very appealing to the very people who can least afford them, but, in truth, any of us might be tempted — if we don’t check them out carefully.

A few months ago, the Office of the Comptroller of Currency warned of “a fictitious entity” calling itself a bank and claiming to be associated with a legitimate bank (which it was not) offering credit cards.

Applicants were told they had to pay an upfront “deposit” of up to $900. Deposit checks were cashed but applicants didn’t get a card.

In another incident, people who applied for a card were asked for a substantial fee. When applicants received their cards, they found they could only be used in certain retail outlets and catalogs selling outrageously overpriced goods.

However, it’s not always as easy as you might think to detect phony credit card offers.

For instance, referring to the two examples just given, sometimes legitimate issuers will ask people with a bad credit record to pay a deposit and will also usually severely limit the initial line of credit.

These are known as “secured credit cards” and the deposit may be returned after a year of good repayment history.

And, of course, it’s certainly not unusual for card issuers to charge an annual fee, though this is usually quite modest, in the $50 to $100 range.

So what can you do to avoid falling for the scam deals?

Here are 10 actions you can take.

Email & Direct Mail

1. A mailed offer should include the name of the “chartered depository institution” behind the offer. Check this with the Federal Deposit Insurance Corporation to see if the bank is registered.

2. A solicitation should include a customer service phone number. Call it and quiz the rep about the bank making the offer. No number? No deal.

3. Most legitimate issuers don’t charge application or processing fees. Even if they do, the sum should be just a few dollars. If it’s a three-figure sum, skip it.

4. If you must apply for a secured credit card, contact reputable banks or credit unions yourself to make an application, rather than responding to solicitations.

5. Be on your guard if the card on offer seems to be of special status like “VIP,” “Platinum” or “Gold.”

This is not always a red flag since legitimate companies, such as American Express, do make these offers — but it is a red flag if it comes from someone you’ve never heard of and never done business with.


6. If it’s an automated, recorded call, it’s almost certainly a scam since “robocalls” are illegal.

7. If you’ve registered with the Do Not Call Registry and receive an unsolicited offer, it’s likely also a scam because you shouldn’t be receiving such calls.

8. If the call seems to come from a bank or card issuer you already do business with, remember that you can’t be sure who’s really on the end of the line and shouldn’t give information or take action based purely on that call.

9. It’s also illegal for a third party, such as a telemarketer, to charge an upfront fee for supposedly guaranteeing to get you a card.

10. In general, you don’t to pay anyone to get you a credit card anyway. Speak to the card issuers or banks yourself.

That won’t cost you a cent and is just as likely to succeed as any third party service.

And, if you do have credit problems, consider getting professional counseling support before applying for cards.

The National Consumers League warns: “Fraudulent credit card companies may also claim that they can repair your bad credit for a large upfront fee. But you can correct inaccurate information in your credit files yourself for free, and no one can erase negative information that is accurate.”

To find a local counseling service (free or very low cost) contact the National Council for Credit Counseling or by calling 1-800-388-2227.

Alert of the Week: Did a free pair of “US Airways” tickets just turn up in your mail or inbox along with a solicitation to apply for a free air miles credit card?

Sorry, but the tickets and the card offer are worthless and any information you supply will be used for identity theft. Check out US Airways’ Scam Alert page.

That’s all for today — we’ll see you next week.