Avoid Credit Card Disputes by Being Aware of Common ScamsSeptember 27, 2010
Any type of credit card dispute can mean a lengthy process of filing claims with banks, legal authorities and retail outlets. By being aware of the popular scams that are operating over the Internet, mail and phone you can make yourself less vulnerable to these scam operators while avoiding becoming the next victim of credit card fraud. Below are the most common credit card scams according to the FBI. Read over them and familiarize yourself so that you can spot them before they happen to you.
The most popular credit card scams
Whenever you give your credit card information over the Internet, mail or phone you run the risk of becoming the victim of a telemarketing scheme. There are a few phrases that are commonly used by illegitimate telemarketers that should be warning signs of fraudulent deals.
- You must act “now” or the offer will not be good.
- You have won a “free” gift, vacation or prize but you have to pay for postage and handling or other charges.
- You must send money, give a credit card number, bank account number or have a check picked up by courier.
- You can not afford to miss this “high-profit” or “no-risk” offer.
Nigerian Letter or “419” Fraud
Nigerian letter frauds use impersonation fraud with an advance fee scheme. The con artists will mail a letter from Nigeria that offers the receiver an “opportunity” to share in a percentage of millions of dollars. The sender claims to be a government official trying to transfer illegally out of Nigeria. The victim is encouraged in the letter to send information to the fake official such as bank name, account numbers and other identifying information using a fax number provided in the letter. This type of fraud is also conducted via E-mail through the Internet.
Advance Fee Scheme
An advance fee scheme involves a victim being asked to pay money to a false entity in return for something of value, usually a loan, some kind of investment, or a gift.
Health Insurance Fraud
Many Insurance companies are being billed by criminal insurance fraud schemes. The following are the most common insurance scams currently operating:
Medical equipment fraud is usually carried out over the phone, targeting the elderly or sick who are asked for checks, credit card numbers or cash in return for bogus medical devices.
Equipment manufacturers will offer “free” products to victims then charge insurance carriers or Medicare.
“Rolling Lab” schemes involve unnecessary tests which are performed on unwitting victims at health clubs, retirement homes or shopping malls and then billed to insurance carriers or Medicare.
Services not performed involve fraudulent providers billing insurers for services that were never performed by falsifying bills.
This scheme involves criminals who claim the U.S. Government or the Treasury Department controls all bank accounts and for a fee can be accessed in order to erase debt or purchase merchandise. The conmen operating this scam usually refer to the process as “Redemption,” “Strawman” or “Acceptance for Value.”
Criminals will offer a “letter of credit” or “bank guarantee” as an investment opportunity and in return for purchasing the “credit” they are promised huge interest rates of up to 300 percent annually.
Prime Bank Note
This investment scheme offers high yields in a short period of time. Criminals claim to have access to “bank guarantees” which they are able to buy at a discount and turn around and sell at a premium. By reselling the “bank guarantees” they promise victims big returns on their investments.
A Ponzi scheme is an investment fraud where criminals promise high financial returns or dividends not available through ordinary investments. Instead of investing the victim’s money, the conmen will pay “dividends” to initial investors using money “invested” by subsequent investors.
Pyramid schemes are marketing and investment frauds where victims are offered the opportunity to market a product. The real profit is not made by the sale of the product, but by the sale of a subsequent victim buying into that same opportunity to market the same product. Participants are promised return on their original investments by initiating two or more prospects to make the same investment. The supplies of potential investors eventually fall off and as a result the pyramid collapses.
Knowing that these scams are in operation and how they are being conducted will give you the heads up you need to be one step ahead of the criminals attempting to steal your money. If you are ever approached, be sure to document the details so you can report the scam to law enforcement. If you wish to remain anonymous there are hotlines available for reporting a crime without having to reveal your identity.
Hornberger & Brewer have decades of experience dealing with credit card disputes, credit card fraud and identity theft. They understand there are many opportunistic criminals out there operating sophisticated scams. They also understand that any type of credit card dispute can be very complicated. Helping all of their clients navigate the legal procedures required to resolve credit card dispute quickly and successfully is one Hornberger & Brewer’s top priorities.
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