Whoa there! Watch out for cell phone ‘credit muling’

Scammers have found yet another way to exploit people who need money fast, including cash-strapped college students: Pay them to open wireless contracts that include new smart phones, tablets and other mobile devices. The scammers target people to act as “credit mules.” That’s when a scammer uses someone else's identity, personal information and credit to get something of value. In this case, it’s a wireless device.

Here’s how it works: A scammer — also known as a “recruiter” — asks the targets — also known as mules — to buy a number of phones under separate contracts. The recruiter pays the mules and reminds them to cancel the contracts within the allotted time — typically 15 to 30 days. The recruiter then takes the phones, unlocks them, and sells them for profit. Stay with me here: A lock is a software code that the manufacturer puts on the phone as required by the carrier that sells the device. The lock ensures that the phone can be used only with that carrier’s network until a different code is used to unlock the device. A single unlocked phone with no contract can be sold on the street in the U.S. for hundreds of dollars — and overseas, for thousands.

But when the mules try to cancel the contracts, they realize they’ve been duped. Regardless of what the recruiters told them, they can’t cancel the contracts without returning the phones. So the victims are not only on the hook to pay for the phones, but they also have to pay the monthly service fees for the length of the contracts. If they can’t pay, the accounts go to collection and their credit ratings suffer. Negative credit can affect their ability to get credit, insurance, a job, and even a place to live.

If you’ve been approached by someone offering you cash to sign a wireless contract — or already victimized by a “recruiter,” the FTC wants to hear about it. Your complaints help us stop rip-off artists, scammers, and fraudsters.

Blog Topics: 
Money & Credit

Comments

Thanks for these updates. So much garbage out there. Hard to know what's what.

If the "recruiters" are letting the "credit mules" know ahead of time what they are getting into then its not garbage. You know what is garbage is that Verizon gets paid $750 a line by our government to tap into lines without a warrant! AT&T gets paid $350 a line. THAT IS GARBAGE. Also, Verizon charging $15 per GB of data that you go over is GREEDY and garbage. Verizon is NOT HURTING by these cell phone traffickers in any way. It costs Apple literally $150 to make an iPhone and they sell it retail price from $600 to $900... THATS GREEDY AND GARBAGE! I'm sick of the elite 1% and corporate America. If someone is homeless and they ABSOLUTELY NEED money and theyre HUNGRY or FLAT BROKE and their credit is JUST GOOD ENOUGH for a cell phone contract, and they ARE NOTIFIED OF THIS AFFECTING THEIR CREDIT and the person recruiting them has gone through the same process... how is that garbage??? WHO IS ANYONE TO JUDGE???!!!

Thanks for educating me I will use extreme caution when seeking anything on the Internet

I WANT TO ALERT ALL POSSIBLE PERSONS INTERESTED IN HAVE CHEAP CELL PHONE SERVICES, AVOID TO SUSCRIBE CONSUMER CELLULAR IN OREGON AND APPERARS TO BE SUPPORTED BY AARP OR OWNED BY AARP BUT THEY JUST THE FIRST MONTH GIVE CUSTOMERS GOOD PRICE BUT NEXT MONTH THE PRICE INCREASE 300%. AVOID TO BE THE NEXT VICTIM

I went through consumer cellular my phone never worked right and for the last few months they have been charging my card twice a month!

I never had trouble with consumer cellular except for a phone that doesn't work. I had them for several years. They don't make you sign a contract and I paid by check (they didn't have a problem with that). If you belong to aarp, you get a 10% discount which I got. I quit consumer cellular several months ago to be on my husband's plan so that we would have only one phone bill (didn't save anything), but now I am sorry that I did as I am getting all kind of telemarketing calls (I only have my cell phone for emergencies and to call my home and spouse, don't use it for anything else). If there is a problem with consumer Cellular, it has to be something new.. check with them and give them a chance to fix it.

Wow. This is a new one on us. We're definitely going to let our clients and social media followers know. It's bad enough that people are stuck with a contract and no device - the negative credit is the long-term damage.

Thanks for this information. This is a new scam.

Yesterday my screen lit up all red with the message "Your Email inbox is infected" call
1-888-497-78654. I called the number and someone in Tim-Buck-To wanted access to my computer to fix the problem. I hung up. My Email's OK.

Ms Tressler, Have you ever written a blog on "extreme couponing"? The time it takes, money to acquire coupons from papers, magazines,online printing etc, distance+gas+time to go purchase items, money saved versus money spent in time and actually shopping. When I volunteer, I have seen someone doing their couponing over work. Includes searching, collecting, printing etc on company time. Think it is a bit out of control for people who practice the habit. Not to mention loss of business $$. I also chuckle at people who drive extra distance to save .03 cents on gas. Seriously, my take is 10 gallons, so 30 cents saved if it took me any extra time or gas is not worth it at all. My motto, so the math! Would like to read any blogs on these subjects. Thank You for all your great info.

Diana,
You're obviously far more intelligent than anyone else on this thread?!? Please feed us more oh great one!

So tell me Diana, precisely WHAT does YOUR comment on couponing have ANYTHING relevant to add to this blog on cell phone scams?

Diana, I love people like you who don't coupon. It keeps the books balanced for the stores after I go in. I do the Math! Thanks

Thank you for the information. I have a new job and they are requiring that I get a cell phone. I know very little about newer electronics and prefer it that way.Since I don't trust computers I had planned on going into a legitimate phone store for research and shop plans. You've confirmed my decision because there's no way I could afford such a scam.

Thank you for the information, it is very appreciated

Does anyone know anything about the tv commercial that advertises a knee brace at little or no cost for medicare patients. annd if you answered that call, what can you do?

So sad that our technology has taken a turn for the worse. I will forward a quote from Albert Einstein that I have posted on my wall: "I fear the day that technology will surpass our human interaction. The world will have a generation of idiots".

Well am a victim of identity theft i don't no where to get help I no the women usein my social since 2003 till but I didn't no her last name till last year she contacted me on Facebook she has racked some much in my name fingerhut cellphones u name it ever thing under the sun 11yrs

I left T-Mobil when the clerk tried to switch me to an automated contract renewal line after setting up free replacement of my phone due to a reception issue. (by the way, written letters are now much more powerful then email when making complaints to company's headquarters) I talked with a local manager after sending the letter, and received a call from the customer service manager at national regarding this indecent. Went to Consumer Cellular and have been satisfied since.

Total security must be ensured first both from device manufacturers and the network providers. Soon all types of payments will go mobile online.

I file a complaint with the FCC on the Carrier Crummy Cricket, I file it in Washington,DC. A lot of consumers don't know there rights as Comsumers. You are to get good quality Service, Good internet, and Good coverage, I got Neither and I pay a fee every month for Insurance, and My Deductable is 150.00 to get a replacement phone. I could use that money for My Light bill, not to repair a phone. If enough Comsumers would complain to the FCC we would not have all these problems with Cell Phone Carriers. And all these added charges, These Carriers need our Business why not Get the FTC on them for Bad Bussiness Practices, and Using our Hard Earn Money to Finance there company. Well I am with a New Carrier and So far they Have been really Good to me. ComsumerRight65

A couple weeks ago my husbands cell phone shut down, all it would show is a warning from the FBI saying he is under investigating and that he needed to pay $300. Well when I got back from the store he was showing me the message on his phone. I told him that it was a scam and some one hack his phone. He was ready to send a Voucher(which is what they wanted from a place called GREENDOT). Well I called the FBI headquarters and explained what just happened and they confirmed is was a scam. I told my husband that the FBI is not going to ask for any money. They will just come and get you. He was like I didn't think so, but you know when you see FBI it freaks you out. So the next day he went to the AT&T store to get an up grade. And the employee told him that he already got an upgrade. He said no I didn't my wife did a couple months ago. The employee kept looking and found a receipt for an upgrade. and kept looking and found another receipt where they added a line. This person hacked into my AT&T account and purchased an upgrade then added a line. This all happened in New York. Thank to fast thinking the fraud department was notified. Had to go put pass code on my account. I called the New York AT&T place in New York and asked how this could happen and they said they had an ID with my name Sonya Walker on it. I was just shocked. I've been checking everything every couple of days. Cause if they have an ID with my name then no telling what else there going to do.

If you are worried about identity theft here are some steps you can take to protect yourself. Find more information about identity theft at ftc.gov/idtheft.

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