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“Flagged” for credit card fraud

Wednesday, December 31, 2008

Your credit card company calls to check out "unusual purchases" on your account and needs just a few bits of information to be able to credit your account. They don't need much, since they already know your name, address, and card number.

Beware! The only thing you should give these callers is a dial tone.

Urban legend-debunking site Snopes.com posted a warning to consumers who receive a phone call from Visa or Mastercard "fraud investigators." These are sophisticated scammers that sound legitimate and often have a lot of information about you already.

The crooks start by informing you that your card has been "flagged" for an unusual purchase pattern and asking to verify some information. They offer to credit your account for the unusual purchase and often have your home address.

After claiming that they are starting a fraud investigation, the crooks then ask you to verify that you have your credit card by listing the three security numbers on the back of the card. Not surprisingly, the scammers then use this information to charge your card every few days. When you receive your statement, you assume the credit is coming and may not inform the company until it's too late.

Keep in mind that real credit card companies never need to ask you for card information, as they already have it. If you get a call from one of these "investigators," hang up and call the number on the back of your card to report the potential fraud to your credit card company.

Snopes.com recommends five ways to evaluate whether something is a scam (with their answers for this one):

1) Is this possible? — Yes, it's possible that scammers might get hold of credit card numbers and then use the technique described above to obtain security codes and process phony transactions against the accounts.

2) Is this plausible?— The scam as described above is not extraordinarily difficult or expensive to pull off; all it requires is access to a telephone and the establishment of a merchant account for processing credit card transactions. It also assumes the scammer already has the names, addresses, phone numbers, and credit card numbers (plus expiration dates) of his victims, but that information might be obtained in a variety of ways (such as breaking into and stealing customer data from merchant web sites).

3) Are there known instances of this occurring? — A MasterCard rep says they would not ask a cardholder to disclose security codes or provide any information verifying physical possession of a card.

4) Is this a widespread phenomenon? — Unfortunately, neither MasterCard nor VISA would provide Snopes.com with any statistics regarding the specific scam described here or confirm any actual instances of its occurrence. However, numerous readers have informed us they've received calls from persons identifying themselves as fraud investigation agents and asking for sensitive personal data.

5) Is this something that might affect the average person? — Yes, anyone who holds a credit card is a potential victim of this type of fraud.

The best protection against these type of phone schemes is to always verify the identities of the people with whom you speak. If you have security questions or concerns about your credit card, call the financial institution who issued your card directly. If someone contacts you by phone about your credit card, ask the caller to provide his name, department, and extension, then hang up and call him back through the phone number listed on your credit card or billing statement.

To learn more about this scam, visit Snopes.com Fraud Investigation