Your telephone rings. Good news! You and your spouse have ; just won a four-day trip to Acapulco, all expenses paid. Just one B minor detail: Could you please give your credit-card number so ? your identity can be validated?
By now you've probably guessed what's reallly happening in all the scenarios outlined above. They're all credit-card scams, and right now is the prime fraud season as holiday shopping -- and returns -- hit their heights.
"Transaction volume is double in December and January," points out Daniel G. Finney, spokesman for MNC Financial Inc., parent of Maryland National Bank. "Perpetrators of fraud understand it's a great time to slip between the cracks."
With 6 million accounts, MNC's credit-card division, MBNA America, is one of the largest credit-card issuers in the country and has one of the lowest loss ratios. Even so, in a recent government filing, MBNA said a near tripling of its nonperforming loans -- to $21.3 million as of Sept. 30 from $8.6 million a year earlier -- was "fraud-related."
If credit cards are stolen or lost, the card holder's liability for unauthorized purchases is limited to $50 a card. If the cardholder notifies the credit-card company before the first purchase is made, he doesn't have to pay even that.
Most credit-card fraud is committed by stealing account numbers and expiration dates. Crooks, after all, don't need the actual plastic to do their work; the account number and expiration date can be used to order merchandise by phone or to add unauthorized charges and cash advances to a card holder's LTC account. In most of these cases, the $50 loss limit often applies, but at times it's up to the discretion of the card-issuing company.
Worse, enough information -- say a phone number, credit card number, driver's license or Social Security number scribbled on a check already imprinted with a name, address and bank account number -- could enable someone to obtain another credit card in the check writer's name.
"They can file an application and just change the address and you never get the bills, never get the delinquency notices, the collection calls," says Mary Beth Butler of Bankcard Holders of America, a non-profit consumer group.
Culprits can include dishonest store workers, crooked bank employees, people who retrieve credit-slip carbons from trash bins and telephone flimflam artists. There also have been cases where lists of valid credit-card numbers and expiration dates have been stolen.
Obtaining credit-card numbers and expiration dates from discarded carbons is still the easiest way to get valid numbers, Finney says.
But con artists also have gotten more creative, and the proliferation of credit cards gives them more opportunity, warns Alan T. Fell, Maryland Commissioner of Consumer Credit and director of the state's Financial Audit Services Team (FAST). Part of the Department of Licensing and Regulation, FAST was set up 1987 to protect consumers from financial fraud.
"Every time you put a check on one, some sleazeball comes up with another scam," Fell says.
Among the more common schemes hitting consumers are telephone boiler-room-type operations, officials in Fell's office say.
"They tell you you've just won a trip and they need your credit-card number for validation," says George W. Jones, director of FAST's Anti-Fraud Unit. "Then you find a $395 charge on your account and you've got a problem."
Or, similarly, a "prize" is awarded and the credit-card number is requested for validation. The prize does indeed arrive -- in one scheme it was a lead gold-washed chain worth less than $4. But then a charge -- usually $39.95 or $49.95 -- turns up on a credit-card bill.
"You have received merchandise. That's very hard to recover," Jones says, explaining that the issue then becomes a matter of valuation.
The charges in these schemes are often kept under $50 to avoid triggering an authorization check. In some cases, unsolicited merchandise arrives at a home, and the head of household assumes another family member has ordered it. Often, a card holder doesn't even realize a charge -- often in the the $29.95 to $49.95 range -- is unauthorized because he fails to check his bill against credit charge slips.
Stamped credit-card slips dumped in the cashier's trash can also be a tool for fraud. They can be retrieved and filled in for purchases.
"There are certain con artists out there knowing merchants are in dire need of help and that background checks are not as stringent as at other times of the year," says George L. Rayburn, assistant commissioner of credit. "They get a seasonal job, even for a few days, just to get the forms."
Butler says people really need to be extra vigilant during the holidays, especially if they make a lot of credit-card purchases.
"People really need to pay attention to exactly what's on their billing statement," she says. "It's very easy to slip a charge through."
According to MNC's Finney, the resolution of a flimflam case depends on the credit-card issuer.
"What it boils down to is how much the credit-card company wants to retain customer satisfaction. It would be correct to say issues like this are negotiable," Finney says, adding that MNC encourages its customers to call immediately about any problems. Its credit-card division runs a 24-hour phone line 365 days a year.
Although many credit-card companies will bend over backward to keep their customers happy -- often they will absorb a loss and waive the $50 a customer is liable for -- people still need to alert authorities, Fell says.
"The public must be aware that these people hurt us all," he says. "This directly costs them in the cost of goods."
Fell encourages victims or targets of credit-fraud schemes to call the FAST hot line. In the Baltimore area, the number is 333-6358. Elsewhere in the state, call 1-800-492-7521 and ask for FAST. Callers need not identify themselves.
"We do not bounce you around," Fell says. "We don't give people the run-around."