Beware of advance-fee credit card scams

Your Business Credit columnist Elaine Pofeldt
Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of, a website for independent professionals. She writes "Your Business Credit," a weekly column about small business and credit, for

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Question Dear Your Business Credit,
I saw an ad stating that, for a fee, this person can get you a credit card, with a credit limit up to $25,000. They state they have relationships with banks to get it done. My research on this person is not negative. Is this worth pursuing? Thank you. -- Rick

Answer Dear Rick,
Good thing you asked. I'd be very wary.

While I can't speak to specifics of the ad without seeing it, I can tell you there has been a long history of crackdowns by the Federal Trade Commission on operations that offer people a credit card for a fee they pay in advance. These schemes even have a name in law enforcement circles: advance-fee credit card scams. In these schemes, fraudsters typically target people who have had trouble getting credit. Once the customers pay the fee, they will often receive something of little or no value -- like a booklet on improving their credit profile -- but don't get the promised credit card.

These scams are widespread and have been for years. The FTC gathers data on consumer complaints from around the country in its Consumer Sentinel Database, and the advance-fee credit card scam is a perennial one on the list. In 2013, this category of complaint was number 10 out of the 30 top categories in the database. There were 50,422 complaints about advance-payment schemes across the country, accounting for 2 percent of all consumer complaints.

Why are these scams so common? Fraudsters know that many people today urgently want credit, perhaps to pay a medical bill or keep a roof over their head during a period of unemployment. It can be hard to think clearly when you are under pressure. Fraudsters take advantage of this by making enticing offers that seem like they will make someone's money problems go away overnight.

Anyone who comes across an offer that sounds too good to be true should slow down and do a reality check. Go to the FTC's website and type in some relevant keywords from any the offer into the search box, such as the company name or type of offer being made. You'll likely get some clues as to whether it is legitimate. I simply entered "credit card fees" and found a bunch of information on complaints reported to the FTC about advance-free credit card scams. If you're still not sure about the legitimacy of an offer after doing this, call your state consumer protection agency and ask for advice.

Most of us want to believe that hard things can be made easy, if only we have the right system. Sometimes, that's true. For instance, if we automate our accounting using  cloud-based software, that may well be easier than using Excel spreadsheets.

But there is no simple way to get around the problem of having a low credit score if you are applying for credit. Banks don't want to provide credit cards to people who have not demonstrated a history of using credit wisely or have not used credit at all. They don't want to chase bad debts. If you are credit-challenged, you will need to build a good credit history the same way as everyone else. Focus your efforts on steps like paying your bills on time, monitoring your credit reports to make sure they are accurate and other methods that really work. Eventually you will be able to get the credit you want. 

See related: Don't be fooled into falling for these 8 scams, 4 ways to build credit without a credit card

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Updated: 12-09-2018