NEW YORK (AP) With credit such a big part of Americans' lives, it should come as no surprise that it's a fertile field for fraudsters.
A newly released survey by the Federal Trade Commission found that three of the top four scams perpetrated on consumers involved credit. The most frequently reported fraud involved advance-fee loan scams, in which a telemarketer or mass mailer promises a consumer a credit card or loan in exchange for an upfront cash payment; consumers pay the money but generally get nothing for it.
The other credit-related scams:
Selling credit card insurance for hefty fees, despite the fact that federal law limits a consumer's credit card fraud liability to a maximum $50.
Promising to repair a consumer's credit record by getting information removed from their credit report or by setting up a new one, sometimes with a bogus Social Security number.
''Those carrying a lot of debt are the ones most likely to respond to these frauds,'' said Pauline Ippolito, associate director of the FTC's bureau of economics.
Ippolito said victims included new immigrants, the very young and those from families that had little sophistication in financial dealings.
''The results (of the survey) will help us target educational and enforcement efforts nationwide,'' she said.
Still, it's often hard to catch the thieves because they set up shop, collect as much money as they can and then move on. Often they work on the Internet, making them even harder to find,
''There are some excellent scam artists out there,'' said Linda Sherry, editorial director for Consumer Action, a nonprofit consumer education group based in San Francisco. ''While we're sleeping, they're working on new ways to trick us.''
At the same time, ''there are a lot of people out there with damaged credit or no credit and credit is very important in our society,'' she said.
When it comes to advance-fee loan scams, the best defense is consumer vigilance, Sherry said.
''We say it until we're blue in the face, but 'If it sounds too good to be true, it probably is,''' Sherry said. ''But people want to believe, they're eternally optimistic.''
She recommends consumers reject all offers from telemarketers, unsolicited mail or late night TV promotions.
''If anyone asks for money up front especially asking that people send money orders a red light should go on,'' she added.
When it comes to clearing up a credit record, consumers should be especially skeptical if the promoter is suggesting something they shouldn't be able to do, like getting a new Social Security number, said Nicole Lowe, a consumer credit education specialist with TrueCredit, a company based in San Luis Obispo, Calif., that sells credit management services.
Scammers in this field often target consumers who have low credit scores from the major rating agencies Equifax, Experian and TransUnion. Low scores, either from too short a credit history or misuse of credit, make it hard for consumers to get new credit cards or good interest rates on loans.
''We've also seen credit repair companies promise to remove things from your credit report, like a bankruptcy,'' Lowe said. ''Sometimes a credit reporting agency might take it off while investigating. They (the scammers) show you that, but then it goes right back on the report after the investigation is done.''
For those who haven't yet established credit, such as recent high school or college graduates, there are several steps they can take to get on the right track, Lowe said.
Some can qualify for a secured credit card. The way it works is that the consumer deposits money, say $300, in a savings account with a bank or credit union and is given a card with a $300 limit.
''If you use it and keep paying it off on time, you'll begin building your credit,'' Lowe said. She also said gas and department store cards are often easier for beginners to get than bank cards because they generally have lower credit limits.
For those who have bad credit reports because they borrowed too much or didn't pay their bills on time, ''you've unfortunately established yourself as a risk'' and could have trouble getting more credit, she said.
Lowe again suggests secured credit cards. Or, perhaps, the consumer can get someone to co-sign for a loan.
Those in the higher risk group ''should check their credit reports to make sure there are no inaccuracies ... and work on improving their credit scores at the same time'' by paying bills on time, Lowe said.
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