BEWARE OF ADVANCE-FEE CREDIT CARD OFFERS
Attorney General J. Joseph Curran, Jr. is advising consumers to be wary of offers that seem to guarantee a credit card will be issued in return for a fee paid in advance. In this month's issue of his Consumer's Edge newsletter, the Attorney General tells of consumers who paid fees ranging from $150 to $199 but didn't receive the cards they were promised.
"These offers are scams," said Curran. "Legitimate credit card issuers don't ask for money in advance. In fact, it's against the law for someone to guarantee they can get you a credit card and ask you to pay for their service in advance."
The Attorney General said that common scenarios reported to his office involve a consumer who is told he will receive a "major credit card," but instead receives a merchandise catalog and a card that is only good for purchases from that catalog. Other consumers only received a list of banks that issue credit cards, along with instructions on how to apply. Other people never received anything at all. When they tried to reach the company to complain, the company had disappeared or wouldn't answer the phone.
Curran said the offers came to the consumers through telephone solicitations, direct mailings or advertisements. He said that not only individual consumers but small business owners have also been victimized, when they were offered a credit card with a large credit line for businesses in return for an advance fee.
Curran said that consumers who want to obtain a credit card but who have a poor credit history might consider these three options:
• Apply for a credit card from your bank, credit union or a local department store, which might be more willing to give you credit than the big lenders.
• Get a "secured" bank credit card. Secured cards are backed by money you deposit and keep in a bank account. You can use a secured credit card in the same places that you would use a "regular" credit card, and if you make all your payments on the card you can build a good credit history and eventually apply for an unsecured card.
• If what you are really seeking is the convenience of a credit card, a debit card might work as well or better for you. Even if you have a poor credit history, you should be able to establish a bank account and then get a debit card for the account. You can use the card in many places where you would use a credit card, except that the payment comes directly out of your account.