FTC FACTSfor Consumers

CREDIT

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FEDERAL TRADE COMMISSION FOR THE CONSUMER

www.ftc.gov

Secured

Credit Card

Marketing

Scams John Doe

0000-0000-0000-0000

A ds like this may appeal to you if you have a poor credit history

or no credit at all. Beware. While secured credit cards can be an

effective way to build or re-establish your credit history, some marketers of

secured cards make deceptive advertising claims to entice you to respond to

their ads.

Secured vs. Unsecured Cards

Secured and unsecured cards can be used to pay for goods and services. However, a secured card requires you to open and maintain a savings account as

security for your line of credit; an unsecured card does not.

ANYONE CAN QUALIFY FOR A MAJOR CREDIT CARD!

 Separated?Divorced? Bankrupt? Widowed?

BAD CREDIT? NO CREDIT? NO PROBLEM!

900-555-1111

DMake the call NOW and get the credit you deserve!

DEven if you’ve been turned down before, you owe it to

yourself and your family.

DYour major credit card is waiting.
Facts for Consumers

The required savings deposit for a secured card

may range from a few hundred to several

thousand dollars. Your credit line is a percentage of your deposit, typically 50 to 100 percent. Usually, a bank will pay interest on your

deposit. In addition, you also may have to pay

application and processing fees — sometimes

totaling hundreds of dollars. Before you apply,

be sure to ask what the total fees are and

whether they will be refunded if you're denied

a card. Typically, a secured card requires an

annual fee and has a higher interest rate than an

unsecured card.

Deceptive Ads and Scams

The Federal Trade Commission (FTC) has

taken action against companies that deceptively

advertise major credit cards through television,

newspapers, and postcards. The ads may offer

unsecured credit cards, secured credit cards, or

not specify a card type. The ads usually lead

you to believe you can get a card simply by

calling the number listed. Sometimes the

number is not toll-free. A '900' number service, for which you are billed just for making

the call, may instruct you to give your name

and address to receive a credit application, or

give you a list of banks offering secured cards.

It also may tell you to call another '900' number — at an additional charge — for more

information.

Deceptive ads often leave out important information.

z The cost of the '900' call — which can

range from $2 to $50 or more;

z The required security deposit, application,

and processing fees;

z Eligibility requirements like income or age;

z An annual fee or the fact that the secured

card has a higher than average interest rate

on any balance.

How to Avoid the Scam

To avoid being victimized, look for the following signs:

z Offers of easy credit. No one can guarantee

to get you credit. Before deciding whether

to give you a credit card, legitimate credit

providers examine your credit report.

z A call to a '900' number for a credit card.

You pay for calls with a '900' prefix — and

you may never receive a credit card.

z Credit cards offered by "credit repair"

companies or "credit clinics." These businesses also may offer to clean-up your

credit history for a fee. However, you can

correct genuine mistakes or outdated information yourself by contacting credit bureaus directly. Remember that only time

and good credit habits will restore your

credit worthiness.

Credit Reporting

If you're considering a secured card as a way

to build or re-establish a credit record, make

sure the issuer reports to a credit bureau. Your

credit history is maintained by companies called

credit bureaus; they collect information reported to them by banks, mortgage companies,

department stores, and other creditors. If your

card issuer doesn't report to a bureau, the card

won't help you build a credit history.

For More Information

To build a credit record, you may want to

apply for a charge card or a small loan at a

local store or lending institution. Ask if the

creditor reports transactions to a credit bureau.

If they do — and if you pay back your debts

regularly — you will build a good credit history.

z If you cannot get credit on your own, you

can ask a relative or friend with a good
Facts for Consumers

credit history to act as your cosigner. The

cosigner promises to repay the debt if you

don't.

z If you're having problems paying bills, you

may want to contact a credit counseling

service. Non-profit organizations in every

state counsel consumers who are in debt.

Counselors try to arrange a repayment plan

that is acceptable to you and your creditors.

They also can help you set up a realistic

budget. These counseling services are

offered at little or no cost to consumers.

You can find the office nearest you by

checking the White Pages of your telephone

directory.

Sometimes, non-profit counseling programs are

operated by universities, military bases, credit

unions, and housing authorities. They are likely

to charge little or nothing for their services. Or

you can check with your local bank or consumer protection office to see if it has a list of

reputable low-cost financial counseling services.

The FTC publishes a series of free consumer

brochures on credit issues. You can request a

free copy of Best Sellers, a complete list of

FTC publications by contacting the Consumer

Response Center by phone, toll-free at 1-877-

FTC-HELP; TDD: 202-326-2502, by mail:

Consumer Response Center, Federal Trade

Commission, Washington, DC 20580 or online

at www.ftc.gov.

Where To Complain

If you have problems or questions about a

secured credit card marketer, contact your local

consumer protection agency or state Attorney

General's office.

You also may file a complaint with the FTC.

The FTC works for the consumer to prevent

fraudulent, deceptive, and unfair business

practices in the marketplace and to provide

information to help consumers spot, stop, and

avoid them. To file a complaint or to get free

information on consumer issues, visit

www.ftc.gov or call toll-free, 1-877-FTCHELP (1-877-382-4357); TTY: 1-866-653-

4261. The FTC enters Internet, telemarketing,

identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online

database available to hundreds of civil and

criminal law enforcement agencies in the U.S.

and abroad.
Federal Trade Commission

Bureau of Consumer Protection

Office of Consumer and Business Education

October 1996

F C EDERAL RADE OMMISSION T FTC OR HE ONSUMER

1-877-FTC-HELP www.ftc.gov

Facts for Consumers