Credit Card Scams

The Federal government is warning consumers about a secured credit card scam run by a sham bank called AmTrade International Bank. Banking regulators released an alert warning that AmTrade,

"...is involved in a scheme that involves soliciting consumers for semi-secured credit cards through the U.S. mail. Potential victims receive solicitations and program agreements, which may mention that Credit One Bank, N.A., is connected with the card agreement. Credit One Bank, N.A., has no connection to this entity."

The fraudsters target consumers with poor credit and offer semi-secured credit cards as a way of repairing their credit. The offers arrive via mail and look like many other such secured credit card solicitations. AmTrade's letter asks victims to send cash deposits of $500 or $900 to secure credit limits of $1,500 or $3,600, respectively. The checks are deposited, but the secured Visa card never arrives. (If you're wondering if you've received one of these offers, take a look at the images at the end of this piece.)

This is the second government alert for this kind of scam since July. Freedom 1st National Bank was making the same fraudulent pitch to consumers. Credit One Bank was also referred to in Freedom 1st's offers. The scammers may seek to alleviate suspicion by including the name of a legitimate bank in the fine print.

Secured credit cards can be a good first step toward repairing poor credit while also offering the credit challenged the convenience and security of a credit card. Scam artists know that people with poor credit do not have many options and are more likely to accept a credit offer, even if it looks suspicious. (See also: What Are Secured Credit Cards?)

Protect Yourself From Fraud

If you suspect you have received a solicitation for a fraudulent secured credit card (or any credit product), protect yourself by understanding the offer and learning more about the company behind it.

• Do not agree to pay a third party a fee to help you find a secured credit card. This is another common scam.
  
• Many banks do charge modest fees for the use of their cards. Scam operators charge exorbitant fees that consume much of the secured credit.
  
• Read the offer carefully. Often the scamsters don't bother to correct typos or misspellings.
  
• Call any customer service 800 numbers noted in the letter. Scam operations are unlikely to staff customer service departments.
  
• Search for the company online. If anybody else has been defrauded, or if the government has already issued an alert, you'll soon find out.

If you are serious about repairing your credit, you have lots of options, including a secured credit card from a legitimate, recognizable national bank.

Have you received this secured credit card scam solicitation or one like it?