The Federal Trade Commission recently shut down a telemarketing scam following consumer complaints of being sold a bogus credit card. In the scam, telemarketers called consumers who’d recently applied for an online payday loan. These consumers were offered a credit card with a $9,500 credit limit if they agreed to pay an advance fee of $99 and a monthly fee of $19.

Consumers were told the cards – the Platinum Trust Card and the Express Platinum Card – could be used anywhere most other major credit card were accepted. However, these general purpose credit cards could only be used in a specific online store that offered overpriced products and often in bulk quantities. In addition, the cards were not reported to the major credit bureaus and would not help consumers improve their credit scores as was initially promised. Some consumers had their accounts debited for the upfront fee even though denied the card offer.

Avoid Advance-Free and Guaranteed-Approval Credit Cards

It’s illegal for businesses to offer a credit card or loan in exchange for an upfront fee. So, if a company makes such an offer, that’s one of the first signs that you’d be signing up for a scam product. Annual fees are normal with credit cards, but this fee is usually added to your credit card balance after you’ve applied for and have been approved for the card.

If you have bad credit, you might be tempted to accept any credit card that accepts you. However, you should still investigate each credit card you consider applying for. Credit card issuers are required to send a credit card disclosure with each credit card offer. This disclosure lists the important details of the credit card like interest rate and annual fee. If you receive a credit card offer by phone, ask the card issuer to mail a copy of the disclosure or to give you the web address where the disclosure can be located. That way, you can make an informed (not impulsive) decision about the credit card.

Beware any credit card that guarantees approval regardless of your credit history before you’ve even submitted an application. Secured credit cards and prepaid cards are sometimes marketed this way, but with these cards your credit limit and spending limit are typically equal to your deposit. Furthermore, you can be turned down for a secured credit card or even a prepaid card in some instances. It’s rare, but it happens.

The FTC stopped this particular scam, but others may still be operating. You can avoid many scams by using common sense. If it seems to good to be true, it probably is. Take time to investigate all credit card offers, especially unsolicited ones. A reputable credit card issuer won’t take an offer off the table just because you take the time to understand it better.

If you’ve already been a victim of a credit card telemarketing scam, report it to the Federal Trade Commission at FTCComplaintAssistant.gov or 1-877-FTC-HELP and to your state Attorney General.

Source: Federal Trade Commission