Many consumers looking for lower credit-card interest rates are being fooled by a nationwide scam that appears to offer a Visa or MasterCard with a bargain interest rate and/or no annual fee.
The pitch comes either by telephone or postcard, according to Bankcard Holders of America, a national, nonprofit credit education and consumer awareness group in Herndon, Va. The group's survey found several dozen companies offering such low-interest-rate plastic to consumers through a network of marketers.
"These companies seduce consumers . . . (by) promising Visas or MasterCards with low interest rates, no fees and $5,000 credit lines," said Bankcard Holders of America Director Elgie Holstein. "Instead, they get a short list of a few banks offering lower-than-average rates on credit cards."
Holstein said the scheme apparently is coordinated by suppliers that "franchise" the list to marketers across the country. The listed banks have not authorized the marketers to guarantee or even market their credit cards, he added.
"Some offer a Visa or MasterCard with really low interest, as low as 11.88%," said Mary Beth Butler, program associate at Bankcard Holders.
"When you call, they'll want you to pay $200 for it. They even try to get consumers to charge it to another credit card. Then what the consumer gets is not a card, but a list of five banks offering low rates. It's a total telemarketing fraud."
Butler said the card schemes range in cost from $98 to $200.
The Federal Trade Commission and U.S. Postal Service are investigating the scam, Butler said, and attorneys general in Colorado and Oregon have filed lawsuits to close such marketers in their states.
The California attorney general's office is "quite familiar" with these cases and cautions consumers to "beware of these kinds of boiler-room pitches period," said Jerry Smilowitz, a deputy attorney general in the Los Angeles office.
If you already have fallen prey to such a scheme, report it to the state attorney general's office.
"If you sent a check, you can kiss your money goodby," Smilowitz said. But if you used a credit card, you can get the charge removed, provided you haven't already paid the bill, he said.
"It's a classic case of charge-back, owing to a billing error," said Smilowitz.
"Within the first 60 days following the date of your statement, you write to the bank and say the item was misrepresented and you didn't get what you purchased. You got a list instead of a card."