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If a telephone solicitor calls and tells you that you need to protect your credit cards from the Y2K Bug or criminals by buying credit card loss protection insurance, HANG UP! This scam of trying to convince consumers that their credit cards are going to be tampered with because of Y2K glitches, or various kinds of criminal activity, is a criminal activity in itself. Although the fraud has been taking place mainly in Arizona, the Federal Trade Commission (FTC) has issued formal warnings for all consumers to beware of such telephone pitches.
The Scam
According to consumer complaints filed with the FTC, the fraudulent telemarketing companies contacted consumers offering what they claimed was credit card protection against loss, theft or Y2K-related problems. To avoid the perception that the company was making “cold calls,” the telemarketers allegedly told consumers that they were calling from Visa or Mastercard, depending on which credit card the consumer had. They then said that criminals have been stealing credit card numbers via the Internet or other technology, and that consumers need additional protection because they are not currently covered against unauthorized use. The complaints allege that the companies claimed that the service they were providing would protect consumers from liability due to unauthorized credit card charges. Finally, in other instances, the telemarketers claimed that because of the Y2K computer bug, consumers would be exposed to credit card fraud, which could be prevented by purchasing similar protection services. In fact, federal law limits loss due to unauthorized credit card charges to $50 (a fee that is sometimes waived by the credit card company).
The complaints further allege that the telemarketers persuaded consumers to divulge their complete credit card numbers by reciting parts of their credit card numbers and requesting the remainder or by claiming to be verifying the consumers’ identification or to be changing “security codes” on the consumers’ credit cards. Using the credit card numbers, the complaints allege, the companies caused charges to be posted on the consumers’ credit card bills without their consent or charged consumers fees ranging from approximately $200 to $400 for protection “services” that did not exist.
The groups that seem to be particularly vulnerable are college students and senior citizens who may not be aware of the fraud prevention already built into their credit cards and the fact that they have a right to dispute any charges on their cards that they did not authorize.
The FTC’s Plan of Action
To help educate consumers about credit card protection fraud, the FTC has organized the Credit Card Protection Sweep program. The program includes a consumer education campaign to help educate consumers about their credit card rights. The FTC has also issued the following: a consumer alert on the general issue of credit card loss protection offers; a bookmark designed to help consumers know their rights concerning credit card billing procedures, the Fair Credit Billing Act, and receiving credits when billed items are in dispute; and a brochure in the Commission’s “Facts for Consumers” series that provides more detailed information on fair credit billing including the types of disputes covered, what to do if you think your bill is incorrect, and other important consumer billing rights. All of this information is available from the FTC’s Consumer Response Center and from the Commission’s web site.
What to Listen For
The next time a telemarketer calls you, be wary of these common approaches of the credit card scam artist:
You are told that you are liable for more than $50 of unauthorized charges on your credit card account.
You are told that you need credit card loss protection because computer hackers can access your credit card number and charge thousands of dollars to your account.
You are told that the Y2K bug will make it easy for thieves to place unauthorized charges on your credit card account.
You are told that (or it is implied that) they are calling from “the security department” and want to activate the protection features on your new card.
And as a precaution for all unsolicited telephone calls and emails on the internet, never give out personal information unless you, yourself, have initiated the call and know the company with which you are dealing.
You may reach the FTC for more information by contacting them via the web at http://www.ftc.gov, or by phone at 1 (877) 382-4357, or by writing to their Consumer Response Center at:
FTC Consumer Response Center
Room 130
600 Pennsylvania Ave. N.W.
Washington, D.C. 20580
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