5 Credit Card Scams To Beware

Completely fictional companies pass these charges onto people’s credit card bills and bank accounts and cellphone bills. The processing companies just pass them on and it’s up to consumers to monitor their bills and dispute the charges. So the fake company is just very nice about canceling all the charges from the people who complain, and then they rake in from all the people who don’t check their bills close enough.5. “Cramming”
Completely fictional companies pass these charges onto people’s credit card bills and bank accounts and cellphone bills. The processing companies just pass them on and it’s up to consumers to monitor their bills and dispute the charges. So the fake company is just very nice about canceling all the charges from the people who complain, and then they rake in from all the people who don’t check their bills close enough.

4. “Shaving”
Thieves try out 16-digit number sequences until hitting one that works. Then they take gift cards from stores and shave off the digits and glue them onto a credit card. They scratch the magnetic strip so the clerk has to enter the credit card number by hand.

3. “Minting”
Identity thieves hack into retailer’s computers and get people’s debt card information, manufacture new debit cards, and start making ATM withdrawals. People living in Brooklyn with their debit card inside their file cabinet all of a sudden start seeing deductions in the thousands from Bulgaria.

2. “Skimming”
Thieves fit electronic readers over the face of ATM machines, store terminals, gas machines, etc which record your credit or debit card info. Sometimes they also use pinhole cameras so they can also get your PIN. The information can then be used for minting, or bartered and sold online.

1. “Universal Default”
If you fall behind your payments with a completely different lender or service provider, your credit card company gets to raise your interest rates to the default rate, usually around 20%. Since this scam is written into your contract, it’s completely legal.

Comments

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  1. Black Bellamy says:

    What is Universal Default doing on this list of criminal acts?

    Similarly, I don’t like high APRs but it’s not a scam.

  2. zentex says:

    Good choice for #1 Ben

  3. @Black Bellamy: If it isn’t criminal, it ought to be. People are getting boned because one of their monthly payments for something completely unrelated happened to arrive ten minutes after the cutoff and was therefore a day late. It’s not good business practice; it’s a flimsy excuse to rip you off.

  4. Trai_Dep says:

    This is a great article, Ben. Very useful!

    Although, you forgot:
    1) Win State Governorship.
    2) Use card to funnel charges that, in retrospect, your better half would probably not find endearing.
    3) Wait as a highly politicized FBI reviews your statements then announces press conference.
    4) Resign as the castigation of Wall Street insiders – whose fraudulent antics you stopped years ago – bemoan your “integrity”.
    5) Single-handedly redefine going rate for call-girl services upward by several thousand dollars!

  5. SkokieGuy says:

    Some of the scams I’ve personally experienced

    Activation Scam
    The ‘security measure’ of requiring you to activate your newly mailed card is a lie. The cards are shipped fully activated, making fradulent charges simply and easy. Hey, just check people’s mailboxes and go shopping!

    Termination Scam
    You cancel your card but charges are still accepted and processed. If you’ve cancelled your card to reject a rate increase, suprise, the rate increase now applies.

    Credit Limit Scam
    Most credit card companies claim to be unable to reject purchases that would exceed your credit limit. Poor helpless companies. They can track your limit and charge you fees within seconds, but the mysteries of using computers to block overlimit transactions is beyond their grasp – even when requested by customers.

    Mystery Merchant Scam
    Get a charge you don’t recognize on your card? Want simple information, such as the merchant’s name and / or phone number? You’ll have to file a dispute in writing. So even though you don’t neccesarily dispute the charge, you are forced to. Then amazingly the credit card companies can figure out who they handed your money to, the same information they claim to not have when you make a simple phone call.

  6. speedwell (propagandist and secular snarkist) says:

    6) “Credit card companies.” Charge you exorbitant, compounding, arbitrary fees and charges for the dubious so-called “service” of allowing you to spend your own money before you are even 100% sure you are going to get it.

  7. speedwell (propagandist and secular snarkist) says:

    Thought I closed that bold tag, please fix?

  8. SkokieGuy says:

    And what about both binding arbitration and the “we can change any terms at any time for any reason” clause that is part of virtually all CC agreements?

  9. joshthephenom says:

    @Black Bellamy: It was just a joke by Ben.

  10. Black Bellamy says:

    @Steaming Pile:

    Yeah I understand you don’t like it, and no one likes it, but a scam involves deception and illegal activity, so why is #1 neither?

  11. ViperBorg says:

    @Trai_Dep: Wooo!!! Go Elliot!

  12. Saboth says:

    @Black Bellamy:

    A scam doesnt have to be illegal.

  13. heavylee-again says:

    @joshthephenom: I don’t think it was a joke at all. I took it to be quite serious, and quite true. It’s just not illegal.

  14. Parting says:

    @SkokieGuy: Just got ”policy update” from my Citi and now they charge 25$, when you go over limit.

    Funny how my Visa just declines purchases, if over limit. And charges nothing.

    It’s just a way to make more money.

  15. Parting says:

    @speedwell: ” before you are even 100% sure you are going to get it.”

    It your responsibility to budget. Unless something exceptional happens, as long as you don’t spend more than you afford, you win. Price protection, cash backs and chargebacks are worth getting a credit card.

  16. Scuba Steve says:

    @Victo: It sounds like harmful, willful negligence on the part of Citibank.

  17. Mike8813 says:

    Why all the angst towards credit card companies? Get a good rewards program. Pay your statement on time and in full, and rake in free money. Who doesn’t like free money?

    I’ve had a couple of disputes on my credit card… removed no problem. Good luck getting your debit card dispute removed. (Like your bank really gives a shit.)

  18. speedwell (propagandist and secular snarkist) says:

    @Victo: How are you supposed to budget future money? At best it is speculative. I do budget, and I do understand it is speculative, and I don’t spend money I haven’t got yet.

  19. Buran says:

    @speedwell: You know what you get paid every month and when the bill is due and what your finance charges are, if you don’t pay the card in full each month.

    Spend accordingly.

  20. kittenfoo says:

    why don’t people look at their credit card bills? i’m all the time checking them, wondering how i spent all that money in one month (gasoline seems to be a big factor these days), and if i can’t remember a charge, i get all worked up until i figure out where it came from.

  21. Parting says:

    @Scuba Steve: I never go over the limit. However, if one company can cap the limit, any company can do it. So over limit fees are simply another way to milk customers.

    Especially in cases, where is there fraud. Not only you’ll be stuck with the dispute, you’ll have to ask to reverse all ”fees”. The fraudster can rack up thousand of dollars more than your limit. And nothing guarantees that the credit card will reverse its own charges.

    By the way, there was a story like this on Consumerist.

  22. Parting says:

    @Mike8813: Paying on time is a great thing. However, what do you do when credit card constantly changes your billing date? And the add ”fees” + interest for ”delayed” payment? More and more different credit cards seems to play with the billing cycle.

    I usually get my statements one week before ”payment due”. If you’re paying by check, then you’re screwed. It takes about 5 days to ”process” payment and 2-3 days to get it there by mail.

    If I wouldn’t use electronic banking, I would already had ”fees” for ”late” payment.

  23. Coelacanth says:

    To people who notice their statements arrive in the mail very shortly before they’re due:

    Enroll in Online Account Services and check your statements!

    They’re ready a day or two after the billing cycle ends, and it gives you additional time to prepare to send in a payment.

    Manytimes, you can pay electronically, or print out a payment slip to use with snail mail.

    Problem solved.

    (Except if the due date is pretty close to a payday, and their payment cycles mess with that schedule.)

  24. alejo699 says:

    Please don’t hate me for saying this, but I love the Consumerist and so I must: “ATM machines” is redundant. “ATM” stands for “automated teller machine.” (And just for the record, “PIN” stands for “personal identification number,” so saying “PIN number” is also needless.)
    Sorry, I just had to get that off my chest.

  25. Zanpakuto says:

    How about the biggest scams in American history:

    #1 Federal Reserve System: All money put into the economy comes with interest attached.

    #2 Abolishment of the Gold Standard: Your money is only worth something because the government says so.

  26. mzs says:

    How can shaving possibly work? You need a name and expiration date too right?

  27. lemur says:

    1. “Universal Default”
    If you fall behind your payments with a completely different lender or service provider, your credit card company gets to raise your interest rates to the default rate, usually around 20%. Since this scam is written into your contract, it’s completely legal.

    The fact that it is in written in the contract does not make it automatically legal. If I put a clause (in fine print or otherwise) in a real estate contract that says you have to give me your children in exchange for the house, that clause would be found illegal if it were brought to court. The example I give is reasonably unambiguous: persons are not property that can be sold. Doing so is illegal. Hence the clause cannot be enforced. That’s basic contractual law.

    Sometimes you can have clauses which are not as clearly unenforcible. To my eyes, Universal Default is such a case. The legality of such clause becomes clear only when it is examined by the court but until it is examined opinions about the legality of the clause are just conjecture. If someone knows of an official judicial opinion regarding Universal Default, I’d like to know about it.

  28. nikalseyn says:

    I caught three charges on my son’s visa and had to impersonate him in order to find out more info, then I had to dispute the charges in writing. All very nice, as I know he is not responsible for fraudulent charges. However, I did some research on the compnay that put them there, one “identy protect” out of Las Vegas. Many many people had the same thng done to them and, like my son, had to have the card cancelled and a new one issued. The funny thing is that when I asked the visa people what they would do to the compnay, they said “nothing”. thus, visa doesn’t care as they just take it off your bill and charge it back to the fraudulent company, who just keeps doing it to more people with no change of anyone doing anything to them. the only people screwed are the ones who do not check their statements. And, the ones who do check and have to go thru the hassle of written disputes, new cards, etc. The whole thing is a game. with the customer in the middle

  29. jlayman920 says:

    For those bitching about overlimit fees, some credit cards allow you to go over the limit and charge you overlimit fees because customers call in bitching about
    1. being in a circumstance where they had to use the card. For example, out of town and needed gas, food, etc.
    2. being in a situation where being declined for exceeding your limit would be embarrassing. For example, a businessman taking clients out to dinner, etc. (You’d be surprised at how many times I’ve been chewed out for this one.)
    Also you aren’t automatically charged an overlimit fee, just if it is over the limit at the time your bill cycles.
    If you don’t want charged then don’t go over the limit. Responsible credit card users are usually no where near their limit anyway.

  30. Trai_Dep says:

    @jlayman920: if that’s the case, they’d make it a nominal fee, not more that most sensible people pay in interest in a year.
    It’s much more likely that your points are repurposed CitiBank rationales for, well, raping their customers.

  31. sventurata says:

    @nikalseyn: Um, yeah, you’re not the customer. If you son is mature enough to have a Visa, why are you illegally impersonating him? Also, it’s nice that you know he didn’t make the charges (see above point re: you’re NOT THE CARDHOLDER), but Visa doesn’t know zip until they look into it a bit. Let’s not jump on the pity party train needlessly.

    @SkokieGuy: Great list. The “mystery merchant” problem usually takes them a month to track down (and reams of paperwork), but the rest are dead on.

  32. OsiUmenyiora says:

    My least favorite scam is also completely legal: Your credit card company allows you to make purchases on your card at one interest rate and then after you’ve purchased the item raises your interest rate. So the terms of the transaction that you thought applied are now different.

  33. theblackdog says:

    @Trai_Dep: Don’t forget about Whore Diamonds.

    Oh wait, this isn’t Wonkette ;-)

  34. Sven.T.Sexgore says:

    I don’t think shaving is really that much of a concern compared to the others. Too easy to be caught by any but the most oblivious counter workers and the other options are so much quicker, easier, and more efficient. It’s been on the news lately but isn’t really that wide spread.

  35. Trai_Dep says:

    @theblackdog: Yeah, there’s a shocking level of conversation on Consumerist that doesn’t involve ass-f*cking.
    First couple of times I got confused and used my Wonkette voice here, and was (admittedly, politely) asked to refrain from such – err – graphic hyperbole.

  36. Hambriq says:

    @Trai_Dep:

    I had the same problem when I switched over here from Gawker. Basically every post I made was “Hey, f*ck you too, buddy! :)”

    Not that’s it’s much different now.

  37. theblackdog says:

    @Trai_Dep: I give this post 5 whore diamonds

  38. hejustlaughs says:

    What about the scam where merchants try to force you to show ID to complete a purchase?

  39. shimshimminy says:

    so it all adds up to the banks being responsible for the current recession and looming posibility of depression. you can only rape the american people for so long. surprised your not charged a fee for getting scammed. most peoples priority is to pay on the card to avoid fees. suddenly no money for movies(piracy?!?) cars homes shopping and all these other markets that noticed thing slowing down but the banks are still getting theirs!