The Evolving Face of Credit Card Scams

An anonymous reader writes "The 12 Angry Men have a followup to their piece on the cross-sell scam credit card companies have begun using. Their new article concerns another evolving scam being employed, where users are racking up huge fees and charges on cards that have never even been activated. The article goes deep into the standard way the scam plays out, as well as detailing some interesting history on how credit applications are processed, and where they are typically (and frighteningly) subject to tampering."

Comments

Virtual Account Numbers

[RootWind]

Like the article mentioned, virtual account numbers are great for online purchases. It's one of the first features I look for. Citibank and Bank of America's virtual card services are both pretty nice, allowing you to set a spending limit for each number, as well as expiration dates. I believe Citibank also locks the number to the first merchant who charges to the virtual account.

Re:Simple (sort of) solution:

[Firethorn]

True, but the fact of the matter is that people DO get into debt more when they use credit cards.

Of course they do. Then again, with things like payday loans and rent to own(effective interest: up to 400%!), there's plenty of people who get into trouble even without credit cards with an interest rate generally less than 30%.

Many people are not disciplined enough to do what you recommend.

True, of course even though I do the same thing, there are things I could theoretically do to increase my earnings/save money even more, but even though it should be fine, I consider it too dangerous or too much work.

For example, I could get a home mortgage for ~6%. My investment returns are averaging 10%. So I could theoretically make more money keeping my house mortgaged(essentially renting it), and going for that 4% marginal. Sure, I'd have to pay income tax on the 10%, but the interest for the house is deductible. Still, that means risking my house - for a measly 4% on average. Sure, some people do it, but I don't like it.

We'd probably be better off teaching fiscal responsibility and budgeting in HS, but even then - we can't make people listen, and that 52" plasma TV looks real good...

Here I am driving a 5 year old car(bought new, paid off, I plan to drive it at least 10 years. $300/month pays for a lot of repairs. Stuff left over once I decide to get rid of it can go towards buying a new car - possibly entirely. I also have a 7 year old 32" TV I bought on special, etc...

But there's people who make less than me running around with HDTVs and expensive cars etc... My only consolidation is that I'm much more likely to be able to retire early and with a better standard of living than them. My goal is to be one of those 'quiet millionaires'. You know, live modestly, but have no real financial worries.