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Do you often feel as though you must be on the lookout at every turn, because there are people out there just waiting to rip you off?

I hate to be the bearer of bad news, but...that might not be a bad idea.

Recently, the Federal Trade Commission released the results of a Consumer Fraud Survey. Astoundingly, it estimated that nearly 25 million Americans were victims of fraud in 2002.

The study indicated individuals with high levels of debt are more likely to be victims of fraud. Three of the top categories of fraud reported to the FTC related to credit, including credit-repair scams aimed at those carrying high debt loads or having bad credit. The most frequently reported type of consumer fraud: advance-fee loan scams, in which consumers pay a fee for a “guaranteed” loan or credit card.

One example of a “pay first guarantee” is what’s called a catalog card. Aimed at those with no credit or poor credit, catalog cards are advertised as a sure-fire way to get a credit card that can be used to purchase all types of merchandise. What many consumers don’t know is that they’re paying an inflated fee for a card that they can only use in specific catalogs. They cannot be used at stores, online, or anywhere else. While the catalogs do have ‘all types of merchandise,’ the merchandise is greatly overpriced.

Credit-repair scams can vary, but most charge their customers a fee to ‘erase’ bad credit when in fact the credit bureau or the creditor are the only ones who can remove negative entries from your credit report. Other so-called repair schemes encourage consumers to apply for an IRS Employee Identification Number, and to use this number (which has the same number of digits as a Social Security Number) to apply for credit and loans. The companies promising such things are dishonest and illegal.

In another ruse, consumers are encouraged to buy protection in case their credit card(s) are stolen and used to run up a big bill. Federal law already protects credit card users with consumer liability capped at $50. In addition, many credit card issuers offer free “zero liability protection policies” that offer full liability protection (i.e. you liability for fraud is $0).

“If it sounds too good to be true…”

It probably is. According to Gerri Detweiler, founder of DebtConsolidationRX.com and author of “The Ultimate Credit Guide,” those with debt problems are often easy prey because they’re looking for a quick fix. She says, “People avoid dealing with debt problems because they face unpleasant decisions, and they’re searching for a perfect solution. The problem is there usually isn’t one perfect solution for debt troubles.”

By the time some get around to dealing with debt problems, they can be overwhelming. Detweiler continues, “Many people are so desperate for a solution at that point, they try things that don’t sound or look right to them.”

“In order to steer clear of scams, you have to go with your gut,” continues Detweiler. “You have to make some tough decisions that may have an impact on your credit card, such as whether to undergo credit counseling, bankruptcy, or debt consolidation. There is no quick and easy solution, only time and effort on your part will bring debt under control.”

“There are no new scams…”

Yes, they’re the same old scams out there. Unfortunately, it’s a whole new bunch of technology that’s being used to the scammers’ advantage, making fraud more sophisticated and harder to detect than ever before. Scammers do everything they can to imitate real offers or situations, and it is truly difficult to distinguish between what is real and what is false.

Phishing is one of the latest methods of identify theft. Emails are sent to unsuspecting consumers from individuals or groups claiming to be major credit card companies, banks, retail companies, etc. The emails seem legitimate enough: “...they’re updating their system and need to verify your account number, password, social security number, or credit card number. It will just take a moment of your time.”

Ira Stoller, Senior Member on the CardRatings.com Message Board, was recently hit with a phish in the form of a fake email doing a pretty good impression of an Ebay consumer alert.

“The message relayed that EBay was updating their database and needed to verify my credit card information,” says Stoller. While the email looked credible, Stoller knew that EBay doesn’t utilize or house credit card information—Ebayers who use credit cards to pay or receive payment utilize a third party. Someone was “phishing” for his credit card information. The email conveniently included a link to a form in which he could fill in the “needed” information.

Stoller next did something that not enough consumers do. He checked the EBay website for a consumer complaint page and reported the fake email. Companies emulated by these types of scams want to know about fraudulent activity that illegally uses their name and trademark because it will help them to protect the consumers who use their services.

Other ways to report fraud:

• Consumers can call a special FTC hotline – 1-877-987-3728 – to report a scam or get more information about telemarketing fraud and how to prevent it.
• The following link can be used by consumers to file complaints against card issuers: http://www.occ.treas.gov/customer.htm
• If you think you've been a victim of an advance-fee loan scam, contact your local consumer protection agency, state Attorney General or local Better Business Bureau (BBB) to report the company.

Finally, how do you keep up with what’s real and what’s not without being completely paranoid? There are lots of resources to help you distinguish fraudulent activities from the real thing. Consolidated Credit Counseling Service, Inc. offers “Watch Out For Credit Scams,” which covers many types of fraudulent activities in detail. It is also a good idea to review our free credit card ratings, including our popular credit card consumer reviews, before you apply for any credit card offer.

Finally, the FTC shares the following tips:

• Legitimate lenders never "guarantee" or say that you are likely to get a loan or a credit card before you apply, especially if you have bad credit, no credit, or a bankruptcy.
• If you apply for a real estate loan, it is accepted and common practice for lenders to request payment for a credit report or appraisal. However, legitimate lenders never ask you to pay for processing your application.
• Never give your credit card account number, bank account information, or Social Security Number over the telephone or Internet unless you are familiar with the company and know why the information is necessary.
• If you don't have the offer in hand or confirmed in writing and you are asked to pay, don't do it. It's fraud and it's against the law.

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