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In this video, Chelsea dives into the most common credit card scams, and how to protect yourself from them. Click here to reserve your spot in our 4-week investing course for $150 (normally $199!) — recordings available if you can't attend live!

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Hey, guys. It's Chelsea from The Financial Diet. And this week's video is brought to you by Me. Have you heard? You better have because we are bringing back our most popular event for the fourth time. This is a record here at TFD kicking off June 7. You can join two TFD's resident investing expert Amanda Holden for this four-week live course as she walks you through everything you need to know about investing. From building a diversified profitable portfolio from the ground up, to fine tuning and optimizing your current investment strategy. This class will help you set up a lifelong wealth building plan that takes up very little energy. So grab your ticket to building wealth by doing nothing investing 101 before it sells out because this is the investing course they should have taught you in school. And over 5,000 of you have already taken it. This is a four-week live course that includes office hours with Amanda where she'll answer all of your investing questions. And replays of classes are available if you can't join live so you can watch and rewatch as much as you'd like. This class sells out every single time and tickets are normally $199, but you can get yours for just 150 or $49 off using code Juneinvestingvip at the link in our description. This is our most popular event for a reason. Amanda is an experienced and certified teacher who knows how to make overly complicated and intimidating concepts digestible. Let 2022 be the year you finally start making an actionable wealth building plan, future you will be happy with. And this week we are going to be talking about shockingly common credit card scams, that you may have already fallen victim to, been exposed to or been targeted with. Because the numbers are truly shocking. According to analyst at, scammers attempted over $8 billion worth of fraudulent activity in 2021 alone. And roughly half of all Americans have been the victim of credit card fraud at least once and a third of us have been hit twice or more. And credit card scams come in all different forms and mediums, from hidden sensors on machines, to internet based deception. And even as we learn about these scams and protect ourselves from them, they are getting more advanced and better at tricking us every year. I myself have even fallen victim to more than one type of credit card fraud in my time. And chances are I may get hit again in this life. But here are some of the most common ones to look out for and protect yourself against and we'll talk a little bit at the end of the video as well about our best tip for minimizing the damage if you have been scammed. So without further ado, let's get into it.

Number 1, is phishing. So basically, a phishing scam is when you are presented with something like a link or a site to log in and share credentials, whether that's a username and password or credit card info or Social Security number, usually by looking like a legitimate place to be entering this information. Often these scams will come to you in an email for example, saying maybe your data has been compromised and to click here to reset your password or update your information. Or you might get a phone call saying that your water or electricity are being shut off for failure to pay, or even a desperate plea from a charity asking for donations. During the worst of the COVID-19 pandemic for example, there were tons of phishing scams pretending to be the World Health Organization or the CDC, or some company claiming to have masks, or COVID tests available. In fact, According to the FTC, there's been at least $38 million worth of fraud tied to COVID-19. And there are also scams promising everything from free iPhones to miracle cures for various ailments. In any case, the ultimate goal of these credit card phishing scams are to get you to enter your credit card info one way or another. And the sheer volume of these scams is astonishing. Between 2017 and 2018, the number of known phishing scams nearly doubled. In 2021, the FBI reported a 400% increase year-over-year in phishing attacks and most of it is coming to your email inbox. While phone and text phishing schemes are not unheard of, about 90% of the time it's going to be an email. So here are a few things to look out for to protect yourself from phishing schemes. The first is drama. If you have a history of paying your bills on time, your utility company is not going to call you in a hot panic threatening to turn off your lights. You're likely going to get a few warnings before they would take it that far. Another sign is ambiguity. Someone might say they're your bank or the government, but they can't tell you exactly which bank or office they're from. But it can be hard to ignore what feels like a real plea for help from a cause that you care about and scammers know this. So especially in the wake of things like humanitarian or natural disasters, it is very important to check the legitimacy of any organization that might be reaching out for donations. If you feel any sense of doubt, it is always OK to hang up the phone or delete the message. You can always write down the info first and then Google it. But there's no need to act in the emotion of the moment, especially if it's something where you need to enter your credit card info.

Number 2 is interest rate reduction scams. These will usually start with a phone call offering to lower your credit card interest rates. In most cases they'll do one of two things. In one scenario, the person on the phone will offer to transfer your credit card balance to a low interest credit card. And if you say yes, they'll keep you on the phone while they sign you up to move your balance. In another scenario, they'll just call your credit card company for you, with you on the phone, and negotiate a lower rate on your behalf. In both cases, they'll charge you hundreds or even thousands of dollars for "services rendered," asking you to share your checking account information so that they can transfer the money directly. So now they've got your money, your credit card info, and your bank info, along with any other personal details you shared while on the phone. In 2021, a fake company called EM Systems and Services scammed over 11,000 people with bogus interest rate reduction services. Most people were charged between $695 and $1,495 for the company's fake services, totaling $11 million. Thankfully the FTC did catch them and is refunding all that money. But it's not always a happy ending. And guess what, these aren't even real services. You don't have to pay someone else to negotiate with your bank to lower your interest rate. You can do that yourself for free. And same with a balance transfer. Virtually every major credit card company also offers a balance transfer card option, which are cards that offer an extremely low interest rate or even zero interest for the first year. These can be a great option for people dealing with credit card debt, but they're not a service you need to pay for. And if you do end up getting scammed and paying for these services, call your bank right away. Tell them everything that happened. Because in many cases you can lock or close your accounts before a scammer has time to act. And even if that's not the case, they can still help you deal with the situation. Another place you might want to call is the Consumer Financial Protection Bureau, which I successfully used earlier this year when something bad happened to me in a similar genre. I'll be doing a full video on that later.

Number 3 is online shopping scams. We have all seen beautiful Instagram ads that lead to extremely sketchy websites. They'll often have weird nonsensical names like PG PB or at pinko. And all of the photos are clearly stolen from a more legitimate brand. These ads are so common that some YouTubers have even made videos about buying clothing from sketchy Instagram ads. Half the stuff they get is so poorly made that it's basically unwatchable and looks nothing like the photo, and that's even if they get something at all, which they often don't. The truth is online shopping scams are extremely common. According to the FTC, online shopping is the second most common category of consumer fraud. And Americans lost $392 million to online shopping fraud in 2021. And part of the problem is that these scammy websites are getting harder and harder to spot. They can have great photos, trademarks, and a secure domain. So it's easy to assume they're legit. But thankfully, some credit card companies can reverse a fraudulent charge once you realize that you've been scammed. So at least you can get your money back. But that doesn't change the fact that now these companies have your credit card information. So it may be worth looking into getting a new credit card. And online shopping scams are not just limited to credit cards, in fact, one of the easiest ways to spot some of these fraudulent websites is that they don't take credit cards at all. Instead, they'll ask for payment via wire transfer or cryptocurrency. Both of which are much, much harder to reverse, and we all know how I feel about crypto.

Number 4 is unsecured Wi-Fi. Now we are all Odysseus being drawn to the rocks by the siren song that is free unlimited Wi-Fi. But tragically free open Wi-Fi is often not the gift that we think it is, in fact, it can actually be a trap set for you by credit card scammers. Here's how it works. Scammers set up a hotspot in a public place and name it something innocuous like "free public Wi-Fi" or "Akron city Wi-Fi." They don't set up a password so anyone can connect. Once you're on that network, there are a few things that might happen. First, the network might install malware to your computer so that they can steal your credit card at a later date. Second, you might actually make a legitimate credit card purchase while you're connected. And in some cases, this is all a hacker will need to steal your data. Or third, you might be prompted to give your credit card info in exchange for free Wi-Fi. And this makes the scammers job extremely easy since you're just giving them your information for free. So it is unfortunately in your best interest to be extremely suspicious when confronted with free Wi-Fi, rather than just hopping onto it. If the network asks for your credit card info, disconnect immediately. And if you're at a place like a coffee shop or a hotel that might offer free Wi-Fi, double check with staff to make sure you're on the right secure network. And if you are just taking advantage of free unsecured Wi-Fi, at minimum, do not make any credit card purchases while you are on that network.

Number 5 is retail credit cards. Now, basically anyone who has ever shopped anywhere at any time in their life is aware that most large stores will attempt to get you to sign up for their store credit card in exchange for some type of nominal discount on your purchase today or in the future. Usually it'll be something like 20% off your whole purchase today or a free $100 gift card on your birthday. And retail credit cards are technically legitimate. But there's a lot of stuff in the fine print that can really wreck your finances if you're not careful. For starters, the interest rate on store credit cards is usually quite high. Most credit cards charge around a 15% interest, whereas a retail credit card will be more like 25% or even 30% on average. So if you're not able to pay the entire card on time every month, it adds up really fast. And many retail cards have an extra catch in the fine print that can cost you even more. Let's say you buy $100 jacket using your store credit card, but you only pay off $99 leaving an overdue balance of $1 on your card. You're not just paying interest on that $1. You're paying interest on the entire $100 purchase. In other words, making the minimum payment on a store credit card is not going to save you a dime in interest. And in case that's not enough, retail credit cards are also notorious for charging extremely high late fees. And there's a reason for all of this. Many of these brands rely on those high interest rates and late fees to bankroll their entire operation. They're able to keep their physical stores open because of all the money they're making off their credit cards, in some cases up to 39% of their profits. Now it is understandable to feel totally blindsided by this info. Because that's part of their strategy too. Their strategy is to get you to sign up on the spot, so you don't even have time to read the fine print and learn all about this. And it works. Seven out of 10 people with retail credit cards, apply right at the checkout counter with no idea about what they're signing for. So, yes. Retail credit cards are technically legitimate, but their fine print is deceptive and damaging enough that the chairman of went so far as to say that, "Retail cards are the payday loans of plastic." Now there are times when the occasional strategic use of a retail credit card for things like a very large purchase, like an appliance, might be the right move financially. This can also be true for things like tech devices. But you have to be extremely smart about how you're doing this. For one, you should be able to pay off the entire purchase upfront in cash so that you're not paying those insane interest rates. And if you can, you should cancel that card immediately thereafter so that they're not able to get you any other way.

Number 6, is the one that I fell victim too, credit card skimming. A credit card skimmer is a device that is inserted into or in some way integrated with any kind of credit card scanner. They can be extremely difficult to spot some, even completely invisible to the naked eye. But basically, when you swipe your card, the skimmer reads it and stores all of your information so that the bad guys can do whatever they want with it. Tourist areas are especially common targets for credit card skimmers, because there's so much foot traffic and more credit card activity. But most skimmers are discovered in unsupervised credit card scanners. Think things like gas pumps and ATMs, rather than store counters. According to the Houston Chronicle, it only takes a few minutes for someone to install a skimmer at a gas pump, especially at night when no one is looking. And the Houston police have found 630 skimmers throughout the city since 2018, and 475 of them were found at gas stations. Some of the skimmers were running for over two months before they were discovered. And not all skimmer schemes are localized to just one city. In the early spring of 2022, three men were sentenced for using skimmers in at least five states, again at gas stations and ATMs. There were seven people involved in the four-year scam, and together they Stole $1.2 million using skimmers. And the official sentencing memorandum reported that the officials literally do not know how many people were affected because there were too many to count. Now there are two things that you can do to help protect yourself from this. First, is embrace the beauty of contactless payment. If you can change in your credit card for one that allows you to just tap to pay whenever possible, that reduces your potential exposure to things like skimmers. And secondly, any time it looks like a scanner has potentially been tampered with, avoid it. For me, when my credit card got skimmed, I immediately called my bank and I was reimbursed for all of the fraudulent purchases that had been made with my skimmed info. But it took me weeks to get that money back. And thankfully, I didn't have to do things like pay rent with that money in the time that I was waiting to be reimbursed. So it is much better to prevent yourself from getting it skimmed in the first place.

Lastly, number 7, is the sign up farm. Now this type of scam is directed generally at people who have a great credit score and love doing things like optimizing credit card points and travel hacking. And at face value, it sounds like a great deal. Someone calls you up and offers a way to earn a lot of money as a reward for having great credit. They'll ask your permission to open a few credit cards in your account, usually the type of card that gives you a huge sign up bonus if you spend enough money in the first few months. Once the cards are open, they spend a ton of money and rack up a ton of points. You sell them those points for, say $1,000 to $5,000, and all of the purchases are canceled, so you don't actually owe any money. At least, that's what they tell you. The truth is that this doesn't really work. It's more likely that they will not cancel all those charges they put on your card or pay you for the points, so now you're on the hook for thousands of dollars. Plus because you open multiple new cards at once, your credit probably took a hit too. And sign up farms can do a lot of damage before they get caught. In 2020, two guys were caught for running a sign-up farm that cost American Express more than $8 million. As with many things financially, the rule for these credit card synapse is that if it sounds too good to be true, it probably is. Now the overall most important tip for minimizing the damage if you do get scammed is to be smart, but don't beat yourself up about it. Credit card scams get more sophisticated every year. And again, one in two Americans will eventually get hit with one. So focusing on being pragmatic and doing everything you can to get your money back, or minimize further fraud is very important. And that means just moving forward and not obsessing over how naive you were.

But there is one last thing that you can do to help minimize damage and that's turning on text and email alerts. did a study on credit card fraud and discovered that the text and email alerts can make a huge difference in mitigating the damage of a scam attack. In their study, they found that 81% of fraud victims who did not have alerts set up had to take extra steps to get their money back. Of the people who did have their alerts set up, only 45% had to take extra steps. In other words, setting up those alerts can reduce risk and hassle almost by half. And that's because these alerts allow you to stop this fraudulent behavior in its tracks, because you simply no way sooner and can call your bank for help right away. So make sure you're getting fraud alerts from your bank and credit card companies and tell your friends, because only 60% of men and 52% of women currently have those alerts set up. It's scary out there guys. Protect yourself, especially when it comes to something as potentially dangerous as credit cards. As always, guys, thank you for watching and don't forget to hit the Subscribe button and to come back every Monday, Tuesday, and Thursday for new and awesome videos. Bye.