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6 Credit Card Scams And How To Avoid Them

As fewer transactions are made with cash, the use of credit cards—and their use online, in particular—continues to climb. With increased credit card usage comes an increase of credit card scams. Scammers look to take advantage of a growing comfort with remote payment options, a spike in the volume of online sales and an increase in the number and variety of people who’ve turned to the Internet to make transactions formerly completed in person. Here are six common scams and how to wise up quickly to avoid becoming a victim of fraud.

1. Overcharge Scams

An email, text or call comes in to the target claiming his or her credit card has been overcharged for some product or service. In order to be properly refunded, the target is informed they must follow steps that include revealing sensitive information.

How it Works

The alleged overcharge might appear connected to a product or service the scammer has already identified their target uses, but it’s much more likely for the scam to mimic a service that’s common—a popular streaming platform, like Netflix or Spotify—that random targets are more likely to be customers of.

If the alleged overcharge is for a product or service that the target never purchased or never uses, that may also seem like all the more reason to follow through with getting refunded. The scammer may directly solicit sensitive information to allegedly process a refund, or might direct the target to provide login credentials to a real account that can lead them to credit card information.

How to Spot it

While it’s always important to be extremely skeptical of any unexpected “cold call” asking for personal information, calls like these from companies that have never called before should receive particular scrutiny. No matter the method of contact, any claim that the matter must be settled immediately in order to be refunded or that this is the “last chance” to get a refund should also raise a red flag.

With emails, a good first step is to closely examine the sender’s email address and compare it to other emails from the same company. A scam address may be nearly identical except for a single character, or may mimic a legitimate businesses’ address by rearranging words or adding in words such as “support” or “pay” that sound legitimate. In the body of the email, any misspellings, grammar mistakes or fonts and images that differ in some way from examples in legitimate emails are further red flags, as are emails for which all media (text, images, logos) are actually just a single image file.

What to do

The safest thing to do is to hang up the phone or close a suspicious email without clicking any links or attachments. Consulting one’s credit card statement, contacting the credit card company to verify the alleged overcharge or following up with the company or service in question through their published customer support channels are all good options for getting to the bottom of the situation. To visit a site and log into your account, never access the site from a link in a suspected email—always open your browser separately and bring up the website yourself.

2. Interest Rate Reduction Scams

Some of the most familiar over-the-phone scams in recent years come from “companies” that claim they can reduce their target’s credit card interest rate and save them thousands on interest.

How it Works

A call will state or imply that the “company” has some connection to credit card issuers that gives them an advantage in negotiating lower interest payments. Like many scams and real businesses solicitations, the call may state that the time frame of their offer is limited, which is done to entice the target to act quickly and without the forethought or skepticism that they might otherwise apply. Once the target has been connected to a live operator, the scammer on the other end will ask for credit card information and potentially for direct payments for the alleged services.

How to Spot it

Because of the prevalence of this scam, the FTC suggests treating any pre-recorded interest rate reduction solicitations with “extreme skepticism.” Legitimate third-party debt relief companies may offer similar services, but it’s rare to receive a cold call solicitation, and they are prohibited from charging a fee before reducing or settling debt, so any request for money upfront should set off alarm bells.

What to do

Those actually interested in trying to reduce their credit card’s interest rate can simply call the card issuer’s customer service line—usually right on the back of the card—and speak with the issuer themselves. In reality, even a legitimate third-party service has no real advantage over the cardholder in negotiating rates with a credit card issuer. The safest bet is to ignore all phone solicitations for this type of service and seek them out on your own if you need them.

3. Arrest Phone Call Scams

To those familiar with identifying phone scams, these may seem like some of the most far-fetched and laughable. To unsuspecting targets, however, they can be particularly distressing—which, sadly, the scammers count on to make them work.

How it Works

This scam aims to scare the target into using a credit card to “pay off” debt, fines, tickets or taxes that they allegedly owe, which also supplies the scammer with their target’s credit card information. The call claims to be from a federal agency like the CRA or from some other government entity with implied connections to law enforcement. It may even appear with a caller ID that’s been “spoofed” to look official, even though it’s not. To coerce the target into cooperation, the call threatens that the target will be arrested, that a warrant is already out for their arrest, that legal action will be taken or that they will be fined.

How to Spot it

Real law enforcement or federal agencies will never address people over the phone like this. Any call that threatens being charged with a crime or being imminently arrested for the failure to pay money over the phone is a scam. It’s also unlikely for a legitimate government agency to demand sensitive information over the phone, especially on an unexpected call. It’s common for these scams to present robotic, pre-recorded messages that seem particularly terse, unusual in language or unprofessional and they might make vague references to “the local police” that don’t fit the style of language used by real law enforcement.

What to do

While it’s never a good idea to reveal sensitive information to a cold caller, don’t be persuaded past better judgment by calls claiming to be from an authority. For people that do have outstanding fines, recent criminal activity or the like, know that real authorities would never reach out by phone to collect payment by credit card. Any concern can be addressed by hanging up and contacting the agency in question directly.

4. Donation Scams

One of the simplest but most effective credit card scams, this trick dupes the target into willingly volunteering their credit card information over the phone.

How it Works

The target receives correspondence, most often through a phone call, in which the scammer pretends to be from an organization or cause soliciting charitable donations. Scammers have been at this trick a long time and have developed strategies about what impersonations and circumstances might bring about the best chance of a target agreeing to donate on the spot. They’ll ask for credit card information to be relayed and the rest is history—the history of how you never saw your money again.

How to Spot it

While real causes and organizations certainly do solicit donations with cold calls—and use persuasive tactics on the phone to be successful—hair on the back of a neck should still go up for any unexpected request for financial information over the phone. Scammers may use current events like a real natural disaster as an opportunity to solicit “humanitarian relief” or the like with an added sense of legitimacy and urgency. They may claim to be from real non-profit organizations like the Red Cross or other institutions like fire departments.

Of course, scammers can be expected to try to tug on their targets’ heartstrings and are keenly aware of how powerful the use of specific anecdotes or narratives may be at influencing people. Emotionally manipulative ploys for money are not unique to scammers, but they are an important tool and should raise suspicion.

What to do

If donating to the cause that the caller claims to be from is something you’d like to do, take down any information given by the caller, as well as the phone number they call from and hang up without providing any financial information. Google the phone number (place it within quotation marks to get an exact match) to see if it has already been identified in connection with scams. The government of Canada has a list of registered charities that can be used to see if a charity is registered. For a familiar cause or organization, we strongly recommend seeking out a way to donate other than the soliciting caller—using the organization’s website is a great way to do this.

5. Skimming

A classic form of credit card information theft, this scam has persisted despite the introduction of EMV cards (“chip cards”).

How it Works

Scammers look for heavily-used but unattended payment terminals at places of transactions like stores, ATMs and gas pumps. They install an electronic device called a skimmer on or near the actual card reader that quietly records credit or debit card information while a legitimate transaction is being processed. Other than identifying the presence of the device itself, the victim has no way of knowing their card information has been skimmed until fraudulent activity begins, at which point it may be too late to stop.

How to Spot it

Skimmers are often made to look like a real component of the card reader apparatus in order to avoid detection, including the card input slot and the keypad. If anything about the payment terminal looks tampered with, unusual or “off,” in any other way, proceed with caution. Visual clues of tampering include graphics that are unaligned, colors on one part of the machine that don’t quite match with near-identical colours elsewhere, components that seem larger or extend outward farther than expected, loose or crooked parts, or any elements that seem to differ between one identical payment terminal and another nearby. A keypad that feels cheap, too thick, or unusual to the touch is another potential clue.

What to do

Use extra precaution using your card at places like laundromats, vending machines or outdoor venues in which prevention might be more difficult or oversight of the machines might be less direct. Tourist destinations with a high volume of non-repeat patrons have also historically been hotspots for skimming. Other than detection, a mobile wallet, for places at which it’s accepted, is one way to reduce risk.

6. Phishing Scams

Similar to overcharge scams, phishing scams involve scammers posing as real companies or services in order to gain your information.

How it Works

Phishing scams pose as a legitimate company or service but provide fraudulent instructions or links in order to gain access to sensitive information. Some of the most dangerous ones attempt to access financial information directly by posing as a real credit card company or another real entity that would conceivably need legitimate access to card or account details.

How to Spot it

Phishing scams come both by phone and email and may present a variety of different ploys to gain a target’s trust. A common phishing scam might claim that account details for a credit card need to be updated, that an account has been compromised and must be recovered or that a security check is necessary for some other reason.

The scammer might ask for answers to the target’s security questions, positioning themselves as if they already know the answers and are simply verifying. The target may be asked to relay information like this over the phone, or an email may direct them to an imposter website that mimics an existing business’s site and allows the scammer to collect information.

Some matters that phishing scams imitate might be time-sensitive, but scammers will really rush you. A red flag is a heightened sense of urgency or a specific, short timeframe in which instructions must be completed. So too are assertions that the alleged company “has been unable to reach you until now” or that “this is the last time you will be contacted,” which have become hallmarks of phone scams.

What to do

Never provide answers to security questions on an unsolicited call. This includes personal questions set up in advance, like one’s mother’s maiden name or the street they grew up on, but it also certainly includes one’s date of birth, Social Insurance Number (SIN) and the three-digit code on the back of a credit card.


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