If you're looking for credit, be wary of some 'gold' or 'platinum' card
offers promising to get you credit cards or improve your credit rating.
While sounding like general-purpose credit cards, some 'gold' or 'platinum' cards
permit you to buy merchandise only from specialized catalogues. Marketers of these credit
cards often promise that by participating in their credit programs, you will be able to
get major credit cards (such as an unsecured Visa or MasterCard), lines of credit from
national specialty and department stores, better credit reports, and other financial
benefits.
Rarely, however, can you improve your credit rating or get major credit cards by buying
'gold' or 'platinum' credit cards. Often the only major credit card you might get is a
secured credit card that requires a substantial security deposit with a bank. In addition,
many of these credit-card offerors do not report to credit bureaus as they promise, and
their cards seldom help secure lines of credit with other creditors.
Such 'gold' and 'platinum' credit-card offers usually are promoted through television
or newspaper advertisements, direct mail, or telephone solicitations using automatic
dialing machines and recorded messages. People who live in lower-income areas often are
the target of these sales pitches.
Watch Out For...
Be wary of 'gold' and 'platinum' card promotions that:
Charge upfront fees, without saying there may be additional costs.
Some 'gold' or 'platinum' card promoters charge $50 or more for their cards. Only after
you agree to pay this fee are you told there's an additional fee, sometimes $30 or more,
to get the merchandise catalogues. Yet, these catalogues are the only places you can use
the cards.
Use '900' or '976' telephone exchanges.
Ads for ' gold' and 'platinum' cards may urge you to call numbers with '900' or '976'
exchanges for more information. You pay for phone calls with these prefixes -- even if you
never get the 'gold' or 'platinum' card. The cost for these calls can be high.
Misrepresent prices and payments for merchandise.
You're not allowed to charge the total amount when you buy merchandise from 'gold' or
'platinum' card catalogues. Instead, you often must pay a cash deposit on each item you
charge -- an amount usually equal to what the company paid for the product. Only after you
pay your deposit can you charge the balance. Also, catalogue prices can be much higher
than discount store prices.
Promise to easily get you "better credit."
Marketers of 'gold' and 'platinum' cards often claim its easy to get major credit cards
after using their cards for a few months. In fact, the only major cards you usually can
get through these marketers are secured. A secured card requires you to open and maintain
a savings account as security for your line of credit. The required deposit may range from
a few hundred to several thousand dollars. Your credit line is a percentage of the
deposit, typically 50 to 100 percent.
How To Protect Yourself
Follow these precautions to avoid becoming a victim of 'gold' and 'platinum' card
scams:
Think twice about any offer to get "easy credit."
Be skeptical of promises to erase bad credit or to secure major credit cards regardless
of your past credit problems. There are no "easy" solutions to a poor credit
rating that's based on accurate information. Only time and good credit habits will restore
your credit worthiness.
Investigate an offer before enrolling.
Contact your local Better Business Bureau, consumer protection agency, or state
Attorney General's office to see if any complaints have been filed against a particular
promoter of 'gold' or 'platinum' cards.
If a marketer promises that a card is accepted at certain retail chains, verify it with
the stores.
If a marketer assures you that reliable information about you will be reported to
credit bureaus, call the bureaus to confirm that the merchant is a member. Unless 'gold'
or 'platinum' card merchants are subscribers to credit bureaus, they won't be able to
report information about your credit experience.
Be cautious about calling '900' or '976' telephone numbers.
Calls to numbers with '900' or '976' prefixes cost money. Don't confuse these exchanges
with toll-free '800' numbers. If you dial a pay-per-call number mistakenly, contact your
local phone company immediately. They may be able to remove the charge from your bill.
For More Information
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-FTC-HELP (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 |
FOR THE CONSUMER |
1-877-FTC-HELP |
www.ftc.gov |
|
October 1996 |