How to avoid ‘cardholder services’ scams

If you’re struggling to pay your credit card bills because of economic hardship caused by the COVID-19 pandemic, a call from “cardholder services” offering to lower your card interest rate may seem like a lifeline.

However, you may be putting your personal or financial information in jeopardy.

In many cases these calls are “designed to create leads for firms interested in selling credit card interest rate reduction” schemes to you, says John Breyault, a vice president at the National Consumers League, which operates the website Fraud.org.

In other cases, the calls come from scammers who hope to steal your financial and personal information in order to commit identity theft, says Eva Casey-Velasquez, president and CEO of the Identity Theft Resource Center.

There has been in an uptick in these calls since the pandemic began, Casey-Velasquez says, because they “are appealing to a much broader range of people.”

Previously, many people ignored such calls because they had busy work lives and personal lives, or were doing fine financially, she says. Now, with double-digit unemployment caused by the pandemic, “a lot of people aren’t busy and they’re in dire straits.”

The scammers offer an appealing message – sign up for their offers and you may be able to decrease your debt or get an extension on paying your credit card bills, Casey-Velasquez says.

See related: Credit card identity theft has tripled since 2015

What is cardholder services?

The calls may show up on your caller ID in various ways, such as “cardholder services,” “card services,” “card member services,” or “network services.”

The tricky part is that not everyone using those terms are scammers.

Some $1,200 federal stimulus payments sent to Americans this spring came in the form of prepaid Visa debit cards. The plain envelopes they arrived in were marked “Money Network Cardholder Services,” from MetaBank in Omaha, Nebraska, according to AARP. Some recipients threw the cards away or shredded them, thinking they were fraudulent or were an unsolicited credit card offer.

Other government disbursements, issued by U.S. Bank on its ReliaCard, use the term cardholder services to describe its customer service department.

Mastercard’s website refers to cardholder services as benefits provided to its credit card holders, including access to airport lounges and guaranteed hotel prices.

And a number of financial institutions use the terms cardholder services or card member services on their websites to describe customer service or other resources they provide to their credit card holders.

See related: How to read credit card terms and conditions

How scammers work

If you get a phone call purporting to be from cardholder services, it often comes in the form of a robocall, says Linda Sherry, director of national priorities for the organization Consumer Action. If the recording says you can press a number to opt out of future calls, that “would be a big mistake and simply let the scammers know your number is valid,” she cautions.

While you can block a scammer’s number on your cellphone, fraudsters often switch phone numbers or use spoofing technology, so the calls will likely continue, Sherry says.

It doesn’t matter if your caller ID makes it look like the phone call is coming from your bank.

“Caller ID is broken,” Breyault says. “You really can’t trust what it says there.”

But many consumers will pick up the phone if it seems their bank is calling, Breyault says.

“Many of us have become accustomed to getting phone calls from banks warning us of fraud,” he said. “This is what scammers are relying on.”

These callers use vague terms such as cardholder services so they can appeal to as many consumers as possible. Casey-Velasquez says if the callers claimed they were from “Visa,” for example, “it narrows the pool. If you don’t have a Visa, you say it doesn’t apply to you.”

The Minnesota Attorney General’s Office warns that card services scammers will offer to help reduce a credit card holder’s interest rate, and often charge upfront fees of $2,000 or more. These companies then often fail to deliver on their promises, and the cardholder is out the thousands of dollars they paid upfront.

At other times the scammers will pretend they work for a credit card issuer and they ask the cardholder to “verify” their bank information so they can help reduce the consumer’s interest rate, the Minnesota attorney general warns. Or they will pressure cardholders to disclose their financial information so they can ostensibly take advantage of a “limited time” interest rate reduction.

Instead, the fraudsters will use that information to commit identity theft.

“It’s a huge red flag” if someone who purports to be from your bank is trying to pressure you to provide your personal or financial information or make a snap decision, Casey-Velasquez says. A bank or credit card issuer won’t apply pressure because they want to retain you as their customer.

If you think a call is suspicious, Breyault recommends hanging up the phone and calling the bank yourself, either using the telephone number on the back of your credit card, or by looking the phone number up online.

See related: 10 signs you’re talking to a scammer

Contact your issuer if you need assistance

If you’re having trouble paying your credit card bills, rather than responding to a random phone call you receive, Casey-Velasquez recommends that you contact your financial institution directly and ask for assistance.

Because of the COVID-19 pandemic, many credit card issuers are willing to lower interest rates, defer payments, decrease minimum payments or allow customers to skip a payment, she says. “The industry is trying to work with people.”

You can also work with a nonprofit consumer credit counseling agency to help get relief from your credit card debt.

What to do if you’ve given out your information

If you unwittingly give your financial and personal information to scammers who claim to be from your card issuer, “don’t panic,” Breyault says. “Contact your bank and tell them what happened.”

You should also report the incident to the Federal Trade Commission, the Federal Communications Commission, your state’s attorney general’s office and Fraud.org, he says.