Credit Card Insurance: Phone Scam Overview
Credit card fraud has become a serious epidemic in recent years. Between 2009 and 2015, credit card fraud cost American consumers about $112 billion. Ironically, a common phone scam tries to exploit credit card users by offering protection from credit card fraud.
The scammers sell bogus credit card insurance policies over the phone. They either steal their victims' identities or charge fees for services they will never receive.
How Does This Scam Work?
The target will receive a call from a scammer claiming to be a credit card representative. They tell their target that by investing in credit card insurance they will protect themselves from any unauthorized purchases if their credit card information is ever lost or stolen.
The caller states that only a one-time payment and some basic information is needed to get your insurance approved right away. The information includes your birth date, address, Social Security and credit card number.
Once you've shared this information, they will go on to sell it to third parties or use it themselves to steal your identity.
The scammer will then ask you to pay a fee ranging up to $500 for your insurance premium, they explain that in the case of your card information being lost or stolen you will receive thousands in compensation. Of course, you won't be enrolled in a real card insurance policy after making the payment.
How to Identify the Credit Card Insurance Scam
These scams can be difficult to spot if you don't know what to look for. Here are some tips to avoid being scammed.
Don't share your Social Security number
Companies offering credit card insurance won't request your Social Security number over the phone. Never provide it to them.
You don't need insurance from a third-party company
Most credit card providers offer their own form of insurance and they'll put a freeze on your account if there are suspicious charges. These policies allow you to avoid fees for unauthorized charges, so you'll be protected if your card is compromised.
Get the company background
Ask for more information from the caller. If they are reluctant or hesitant to give it to you, hang up.
How to Report the Scam
Like the credit card charges phone scam, lower credit card rates phone scam, and the frozen credit card phone scam, the credit card insurance phone scam should be reported to the Federal Trade Commission (FTC) and you should block the phone number on your phone.
You can report these calls with our free caller ID app. If you don't have an iPhone, you can still run searches on suspicious phone numbers, and leave your feedback on numbers in our online phone directory.