Companies offering to improve credit scores have recently flooded our TVs and email inboxes. Many provide increased credit lines, rapid debt relief, and straightforward cash access. People with a high debt or bad credit rating can turn to many of these organizations for a quick fix, but the promises of these companies frequently appear too good to be true.
The Federal Trade Commission (FTC) warns customers about the numerous types of credit fraud that consumers confront in today’s society. Offering loans with upfront fees and services to restore one’s credit score are two of the most common and successful deceptions perpetrated on customers. Unfortunately, many of these offers are too good to be true, so buyers must read carefully to avoid scammers and worsening their financial condition.
Scams involving advance-fee loans frequently prey on unsuspecting customers with credit issues or difficulty obtaining credit. These companies guarantee that applicants will be approved for the credit they want, typically a credit card or personal loan, in exchange for an up-front fee paid by the applicant. Before reacting to advertisements that offer simple credit regardless of your credit history, the following are some considerations to keep in mind:
The vast majority of respectable lenders would not “promise” a loan or credit card before the completion of an official application process. This is mainly the case when the applicant has poor credit or has previously filed for bankruptcy.
Requiring credit reports or appraisal payment is generally acceptable and widespread among reputable lenders. It is also common practice to charge a fee for processing or submitting an application. Under no circumstances should you divulge your Social Security number, credit card account number, or bank account information over the phone unless you are familiar with the company, and it is abundantly clear why you are being asked for this information.
Frauds involving credit repair services are currently among the most popular credit scams. They can be found in advertisements published in newspapers, as well as on television and the internet. Consumers are bombarded with telemarketing calls and direct mail flyers advertising simple and rapid credit repair services. Customers must proceed with extreme caution when responding to adverts for these services. Consumers should be careful of any credit restoration companies that according to advice from the FTC:
- Request credit repair payment beforehand.
- Refrain from telling people their legal rights and how they can improve their credit for free.
- Advise against disputing credit report information or illegal actions like creating a new credit identity.
- Recommend avoiding contacting a credit bureau.
- Suggest inventing a “new” credit report by applying for an Employer Identification Number instead of a Social Security number.
A customer committing fraud following illegal advice may be susceptible to criminal prosecution. Customers who suspect a credit scam like those above can contact their local consumer protection agency, state attorney general, or Better Business Bureau. If you wish to learn more about credit fraud or file a formal complaint, visit the Federal Trade Commission (FTC) website.
Why Credit-related Scams Are On The Rise
As the world becomes increasingly digital, so do the opportunities for scammers. Nowhere is this more apparent than with credit-related scams. Here are a few reasons why these scams are on the rise:
1. Credit cards and other financial information can be easily stolen online. Criminals can easily obtain your credit card number and additional sensitive information through phishing emails or hacking into databases.
2. Once they have your information, they can use it to make unauthorized charges or even take out loans in your name. This can ruin your credit score and leave you with thousands of dollars in debt.
3. Scammers are becoming increasingly sophisticated in their methods. They’re using fake websites and social media profiles to lure people in, and they’re getting better at disguising themselves as legitimate businesses or organizations.
What Are Credit-related Scams?
Credit-related scams are rising, and consumers must be vigilant to avoid becoming victims. One of the most common credit scams is identity theft, which can happen when your personal information is stolen and used to open new accounts or make unauthorized charges.
Another common credit scam is phishing when scammers pose as a legitimate company to get your personal information. They may send a bank or credit card company-looking email or text message or construct a bogus website.
Call the customer care number on your statement or visit their website to verify a company’s validity.
One scam that was particularly prevalent recently is the IRS scam. This scam usually involves a phone call from someone who says they’re with the IRS and that you owe taxes. But instead of demanding payment, the caller says you can pay your taxes by buying a prepaid debit card and telling them the number. The IRS will never ask for payment via a prepaid debit card.
Another scam that’s been popular lately is the caller-ID spoofing scam. A scammer contacts you and shows a caller ID number that looks like your bank or credit card firm. The scammer then tells you something is wrong with your account and asks for your account number, credit card number, and other information. Don’t give out any information. Hang up immediately. If it appears on your caller ID, it’s probably not legitimate. The IRS will not use this technique to contact you.
If you suspect identity theft, contact the FTC at http://www.identitytheft.gov or 877-438-4338. If you think you’ve been a victim of tax fraud, contact the Department of Treasury’s Taxpayer Advocate Service at 800-829-1040. The IRS isn’t in the business of calling taxpayers to let them know that they owe money. The IRS usually contacts taxpayers by mail, not by phone.
The IRS will mail you a bill if you don’t pay taxes. The IRS won’t demand that you pay a certain way, such as with a prepaid debit card. Contact your local IRS office if you need to find out whether a call is really from the IRS. If someone calls claiming to be with the IRS and demands immediate payment, it’s a scam. Hang up.
Avoiding Credit Scams
Credit-related scams are becoming more and more common. Avoid these scams with the following tips:
1. Be aware of the different types of credit-related scams.
2. Do not disclose your Social Security number or credit card number to strangers.
3. Be suspicious of unsolicited credit or loan offers, especially if the offer seems too good to be true.
4. If you are contacted by someone who claims to be from a credit bureau or collection agency, verify their identity before giving them any information. You can do this by asking for their full name and contact information and then calling the credit bureau or collection agency to confirm that the person is an employee.
5. Don’t give out personal information over the phone or online.
Be Wary Of Unsolicited Offers
If you receive an unsolicited offer for a credit card or loan, be very careful. These offers are often scams. Ignoring the offer is the best approach to avoid a scam.
You can check an offer’s legitimacy in a few ways. First, research the company online. If you can’t find any information about them, or if the information you see is negative, beware.
Second, never give out your personal or financial information to someone you don’t know and trust. Don’t give out your Social Security or bank account numbers.
Finally, be wary of offers that appear too good to be true. Be especially wary of offers that require you to pay upfront fees before you get the loan or credit card. Check your credit report regularly.
We must be aware of online credit-related scams as we enter the digital age. A few simple steps can protect you from becoming a victim of these scams. Never share your Social Security number or credit card number online. If you’re unsure about a website, research to ensure it’s legitimate before inputting any sensitive information.
Another way to protect yourself is to monitor your credit report. Checking your report regularly can reveal suspicious activity like unauthorized inquiries or accounts opened in your name. You’re entitled to one free report from each of the three major credit bureaus annually.