Want lower interest rates on your credit cards? While the answer is almost certainly "Yes!" you shouldn't pay a random telemarketer $600 or more to try and do it.
Apparently some consumers are doing just that in response to a long-running ripoff in which telemarketers offer to slash credit card interest rates, according to Ohio Attorney General Richard Cordray. His office has been pelted with complaints from residents who were called in violation of the "Do Not Call" list and pressured into signing up for alleged rate reduction services offered by companies with vague names like "Card Member Services" or "Credit Card Services."
It's unclear if the rate reduction telemarketers plan to simply take the money they charge for the service and run or if they do make calls on behalf of consumers. Either way, said Cordray, "These companies are trying to steal from people," and consumers should steer clear of them.
"These companies are collecting fees for a service that consumers do not need," Cordray said. "They are not offering anything that consumers cannot do on their own. While the solicitations may be touting 'guarantees' and 'exclusive offers,' the companies have no more clout with creditors than consumers do."
The calls have an air of believability because the telemarketers often hint that they work for the consumer's credit card company. Some already know pieces of personal information about the consumer. In addition to name and phone number, some seem to know -- or at least manage to guess -- the victim's bank and part of their card number. (The first part of all credit card numbers is based on the issuing bank and easy to discover).
Their claims are bold.
"Card Member Services Scam called my home (saying) they can reduce my rates as low as 6.99 percent," one Ohio resident said in a complaint provided by Cordray’s office. "They asked if I was Terri ... and I said yes. They asked if I was interested in a rate reduction."
The sales pitch was even more alluring for another resident.
"They said (they) could get a 1.5% interest rate," the consumer said. "The caller said she knew (I) was only paying minimum payments on the account."
In perhaps the boldest sales pitch, a caller who said he worked for a company named Global Direct Services actually got the consumer's bank on the phone to try to close a sale.
"(He) said for a one-time fee of $595, they will contact all of your creditors and get your interest rates reduced as well as amount owed," the complainer told the attorney general's office.
An official at the AG's office described what happened next: "The company contacted PNC (Bank)… while the consumer was on the other line. Global Direct Services put PNC and the consumer on the phone together so that the consumer could give permission to release information to Global Direct Services."
But the telemarketer got a surprise. "PNC told the consumer this is a scam and the company was not calling from the United States," the official said.
Evidence of similar scams can be found dating back at least as far as 2006, but it's clear from the flurry of recent Ohio reports -- and a smattering of similar complaints from all corners of the country-- that what Cordray calls a ripoff is resurgent and isn't confined to the Midwest.
The uptick in rate reduction offers comes just as consumers are about to be protected from debt settlement companies and their nearly ubiquitous advertisements. The Federal Trade Commission recently issued new rules that will severely curtail debt settlement advertisements, starting Sept. 27.
The rate reduction calls came from all over the country. In the three dozen sample complaints provided by the Ohio attorney general to msnbc.com, no two calls came from the same phone number. They originated from far-flung area codes in Florida, Nevada, and California and elsewhere. In many cases, the victims received "robo-calls," and were instructed to "press 1" for a chance to lower their rates.
Many consumers who tried to return the calls using their caller ID reported that they reached a non-working number. Msnbc.com tried to call several of the numbers provided by consumers; none worked.
Some consumers complained of harassment, saying they have been getting the calls for up to six months straight, even after requesting placement on the firm's Do Not Call List.
"I find myself constantly amazed at the predators and fraudsters we hear about," said Cordray. "If these folks worked half as hard at creating legitimate small businesses, we could really grow our economy in this country."
RED TAPE WRESTLING TIPS
First, hang up immediately on all telemarketers. If you must be polite, hang up as soon as anyone unexpected calls and asks for money.
Second, it is possible for consumers to call their credit card issuer themselves and request an interest rate reduction, though such reductions are much less common since the onset of the financial crisis. A well-planned call might still be worth it, particularly by consumers who have a solid offer for cheaper credit from another bank.
But some financial experts warn against making such calls. At some banks, such a request could cause an account manager to suspect the consumer might be in some kind of financial trouble and an account review, which could actually lead to higher rates.
Become a Red Tape Chronicles Facebook fan and follow RedTapeChron on Twitter.
