Editorial Policy

Credit Card-Related Robocalls on the Rise

Marcia Frellick

October 4, 2012

If you’ve picked up the phone recently only to hear an automated voice introduce itself as “Rachel” or “Heather” from “card member services” and offer to help you reduce your credit card interest rate, you’re not alone.

In fact, such calls have become more common in the past couple years, thanks to improvements in technology used by overseas companies.

But don’t be fooled by these calls. They are illegal. And the friendly-sounding company might try to trick you into giving up personal information — and your money.

More than aggressive sales calls
The purpose behind the robocalls is to get you to sign up for worthless services — like expensive credit card rate reduction programs that don’t actually work. In the process of signing up, victims also often give up personal financial information.

Those who follow a robocall’s prompt to press a certain number for more information are then transferred to a representative who offers to sign the victim up for a rate reduction program in exchange for an up-front fee. In a 2010 scam, for example, that fee was $990 to $1,495.

Robocall scammers often use two classic sales techniques, says Katherine Hutt, spokeswoman for the Better Business Bureau (BBB).

“There’s the harm and rescue — ‘here’s the big problem you didn’t know you had and I can fix it for you,'” Hutt says. “Or the affinity approach: ‘We got your name from a friend who thought you might like this kind of deal.'”

“These companies look and sound like legitimate companies with emails, websites, phone calls.” — Katherine Hutt, Better Business Bureau spokeswoman

Hutt acknowledges it’s getting harder to tell the criminal tactics from aggressive sales calls.

“These companies look and sound like legitimate companies with emails, websites, phone calls,” says Hutt.

Yet one rule is important to remember:

“If somebody contacts you … and asks for personal information [such as a bank account or Social Security number], never give it to them,” Hutt says. Your bank won’t call to ask you for financial account numbers. If they are legitimate, they would have those numbers already.

Robocalls on the rise
Although this type of scam isn’t new, it’s on the rise. The Federal Trade Commission (FTC) says monthly robocall complaints have climbed from about 65,000 in October 2010 to more than 212,000 in April 2012. Complaints from people asking a telemarketer to stop calling them also rose during that period, from about 71,000 to 182,000.

The FTC and consumer activists say these calls are multiplying as thieves’ calling capabilities get more sophisticated. The companies behind them operate all over the world and can mask their caller ID numbers, a practice known as caller ID spoofing. Because they’re calling from so many numbers, it’s impossible to block a single number and stop the calls. These companies are also increasingly using voice-over-Internet protocol (VoIP) technology, a cheap way for overseas callers to make the calls under the radar of U.S. regulation.

The result is that scammers can make millions of calls in minutes for pennies each. The companies simply dial combinations of numbers until they get an active line.

If you’ve listed your number with the government’s Do Not Call registry, you may find these calls particularly annoying — but they’re illegal as well.

Unsolicited sales calls were banned in 2009. Amendments to the Telemarketing Sales Rule specify that telemarketing sales calls with prerecorded messages, whether answered in person by a consumer or by an answering machine or voicemail service, are illegal unless the seller has obtained the recipient’s signed, written consent. Some exceptions to that ban are political calls, survey calls, delayed flight announcements and charitable solicitations.

Fighting back
The Federal Trade Commission (FTC) is working to eliminate illegal robocalls with investigations and lawsuits. The agency is also hosting a national public summit on robocalls Oct. 18 in Washington, D.C. William Maxson, a spokesman for the FTC, says experts will talk about the technology behind these calls, enforcement efforts and how phone companies can work with law enforcement to reduce or eliminate the problem.

“We’re in the midst of active litigation against companies that have made these calls, and we’re working with other stakeholders to come up with solutions. The summit is certainly a big part of that,” Maxson says.

“We have filed cases against companies that have made well in excess of 2.5 billion phone calls.”     — William Maxson, FTC spokesman

To date, Maxson says, the FTC has filed 88 enforcement actions against 250 parties violating Do Not Call registry and robocall laws, collecting more than $69 million in penalties and compensation.

“We have filed cases against companies that have made well in excess of 2.5 billion phone calls,” Maxson says.

How to hang up on scammers
Robocall scams often come with a prompt to press “1”‘ to speak with a representative or “3” if you don’t want to receive these calls in the future.

Don’t press either one, consumer advocates warn. Doing so tells the robocall program that your number is a working number, and, even worse, it tells them you are home, so they may try to keep contacting you that day.

If you get a robocall you suspect is illegal, report the incident to DoNotCall.gov (the FTC website for tracking these calls), or call 888-382-1222. Reporting can help the FTC analyze patterns for the calls.

What if you fall for the scam? If your credit card gets charged for a service you didn’t authorize or receive, dispute the transaction with your credit card company by phone and follow up in writing.  The FTC has even been able to get some victims’ money back. The agency mailed more than 4,000 checks to consumers nationwide this September, with each consumer receiving between $31 and $1,300, based on how much money he or she lost in the scam.

Here are some ways you can avoid getting scammed in the first place:

  • Never give personal information, including Social Security, bank account or credit card numbers, over the phone to an unknown telemarketer. Always research the company with the BBB.
  • With any company offering any type of financial help, insist on getting a contract in which all terms and conditions are clearly explained before signing up and providing credit card or other payment information.

If you are interested in reducing your interest rate, there are free and legitimate ways to do so:

  • Ask your issuer for a lower rate: Some credit card companies will negotiate better rates for consumers who meet their criteria if they contact them on their own. If you’re a long-term customer, the company will likely want to keep you happy.
  • Get a copy of your credit report at AnnualCreditReport.com: Scrutinize it for any negative information that may be dragging your score down and try to clean up black marks.
  • Shop around: Maybe you’re not getting the best deal. Check a credit card rate comparison site to compare interest rates.
  • Ask for a credit limit increase: If you can keep your balance low and your credit limit high, that gap will improve your score and could land you a lower interest rate. Of course, you’ll need discipline to keep the balance low.