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3 tips to avoid credit card scams

Americans recently lost more than $10 million to bogus credit card charges from a single ring of scam artists.

By Stacy Johnson Aug 10, 2010 9:49AM

This post comes from Stacy Johnson at partner site Money Talks News.


You open your credit card statement and give the charges a glance. There's one charge you don't remember making, but the amount is only $5.95, and the company name looks vaguely familiar. 


Since your bill doesn't include the merchant's phone number or website address, further investigation would take more time than it's worth. So you pay the bill and get on with your day.


That's exactly what the scam artists were counting on.


The Federal Trade Commission recently halted an elaborate, international scam that over a four-year period ripped off $10 million from American credit and debit card holders. While sophisticated techniques were used to set up fake merchant accounts and obtain millions of credit and debit card numbers, in the end the scam relied on something simple -- the knowledge that many people will pay a small charge rather than investigating it.


Check out the following news story, then meet me on the other side for more.

Here's more detail, starting with part of the FTC's recent press release: (Click here to read the entire release.)

At the request of the Federal Trade Commission, a federal court has halted an elaborate international scheme that used identity theft to place more than $10 million in bogus charges on consumers' credit and debit cards, pending a trial. More than a million consumers were hit with one-time charges of $10 or less, and their payments were routed through dummy corporations in the United States to bank accounts in Eastern Europe and Central Asia.
The defendants, using phony company names resembling real companies, and information taken from identity theft victims in the United States, opened more than 100 merchant accounts with companies that process charges to consumers' credit and debit card accounts, according to the FTC complaint.
Most consumers either didn't notice the charges on their bills or didn't seek chargebacks because of the small amounts -- charges ranged from 20 cents to $10. Consumers who called the toll-free (merchant) numbers that appeared on their bills either found them disconnected or heard recorded messages instructing them to leave a message, but no calls were returned.

Scam protection = attention to detail

Scam artists count on the fact that you're too busy to chase down a small charge to an unknown merchant. So when bill-paying time rolls around, set aside enough time to adequately review the charges appearing on your statement. This is especially important if you live in a household where one person pays the bills and more than one person uses the cards.

Follow these steps to avoid becoming a victim of a similar scam:

  • Thoroughly review your monthly statements and verify every purchase. If you don't remember one, check it against the receipt that you hopefully kept. If you don't have a receipt, contact the merchant. If the merchant's information isn't available on the statement, contact the card company. If they don't have the information necessary to contact the merchant and verify the charge, dispute it.
  • If you have trouble remembering charges from month to month, make it a habit to check your accounts more often -- perhaps weekly -- by going online and looking over recent purchases.
  • Set up a simple system to keep track of receipts. For example, put all receipts in a central envelope, basket or drawer. Then, when the monthly statement comes, it will be easy to verify each transaction. This is especially important if more than one family member uses the same card.

To file a complaint with the FTC, visit the agency's online Complaint Assistant or call (877) FTC-HELP. The FTC enters complaints into Consumer Sentinel, an online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad.

A good source for information on identity theft prevention is the Identity Theft Resource Center.


More from Money Talks News and MSN Money:



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