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

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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


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???!!!

Are you serious? Because it's stealing, that's why. The mule is agreeing to pay for something they have no intention of paying for. How about if I buy something from you and just don't pay for it? Are you OK with that? Maybe I think you are charging too much. Maybe you seem "elite" compared to me. Maybe I don't think my theft really hurts you. So it's OK, right? Theft is OK if you can justify it in your own mind.

Well said

Just about everything you said is wildly inaccurate.

Even If you think that what cell phone carriers are doing is an injustice to our citizens, then it still does not justify fraud. You know that lesson we learned in elementary school? About two wrongs, and how they don't make a right? Yeah. The best thing we can do is work against the corporate system through education and voting. That may take awhile, i know. Otherwise, stop using a cell phone and encourage others to do so. All they are is a convenience to us. And while we're at it, can we bring payphones back? Those things were nice.

I agree to pay phones,they are still a necessity. Forget to pay cell phone bill or it brakes, what do you need to do tho take care of it? Go too the corner, not take a cab tho friends house and they won't let you use their phone or? Now take another cab or bus and huff it, and their closed

Actually the handsets made in China cost an average of $11. U.S. up to a high of $35. U.S. at least that's what they were selling for on the border with Nooristan last month!

Not to mention the people who sell them the phone... who are just doing their job... it comes out of their paycheck.

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


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.

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.

Do prepaid

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

Scam makes no sense. Can't people just report their iPhone stolen, and it can be tracked that way if they're still under contract and can prove their personal identity? -- I've heard that police literally show up and demand the phone back. Or was that a rumor too? So--- unless the scammer is selling them overseas, isn't it too much of a risk to sell unlocked phones in the states? -- and if sold overseas, doesn't it get handled overseas by overseas law enforcement? If I were a person that incidentally bought a stolen iPhone off of, say, Amazon, and a police officer showed up and confinscated my phone, to give it/ship it back to the 'mule' so he could cancel his contract-- I'd be upset. How does this work again? Does it even go that far? It's kinda like pawning stolen items, right? If a stolen item is pawned and then bought by a completely different person, is it unobtainable? Or can the police intervene? Is it right for them to do that to the new buyer? Or should the victim just be compensated for their losses? Food for thought.

No, because the phone is not actually stolen.

Plus the "credit mule" committed fraud by signing a contract they had no intention of fulfilling.

Also it's worth noting that the carriers (Verizon, AT&T, etc.) are not liable for paying commission on phone contacts that are purchased this way. So the retailer (small cell phone store) ends up eating the full cost of the phones or about $600 for an iPhone 5S per phone. That comes to $3000 in ACTUAL losses for the retailer for a 5 line contract.

This would only work if there was a national or better still international database of all ESNs so that unlocked phones could be checked for theft before being activated by another carrier. That would be a very extensive database and costly to maintain.

Fedup, if you stay within your plan you won't be billed for overage and if you didn't have insurance on the phone it would cost more to get another phone, unless you are eligible for an upgrade...

I have been doing this unawares until I saw this post, for a guy who has payed for everything and even to cancel the lines. Is that still illegal? Im young with my first child on the way and I just thought it was quick cash and he said it wasn't illegal. Would like help on how to handle this situation because I don't want my family affected in the long run...

This is really a con done on random people. They will drive around looking for their marks and tell them it won't cost them any money. They find out you don't have a deposit and then they will give you the cash to purchase the phones for the discount price because you are opening a new account. They gave me 530 for two iPhone Pluses and waited outside of the Wal-Mart. I never came out.

Damn, did this really just happen to me? Yesterday. From a craigslist posting I answered for "up to $300" "opportunity" ("not a job") to make money "today." A guy responded and asked if I'd ever had a Verizon account. Told me to call their 800#, go through the whole credit approval deal on the phone, to find out if there would be a deposit on the unit he said to ask about, then just tell them it cost too much and end the call. Then he physically took me to a Verizon outlet, paid for the brand new phone including deposit. I stupidly gave all my info for the phone contract and account setup. Account was activated while we were still in the store. Afterward, he paid me a couple of large bills before going on his way with the phone. Should've known. The only explanation I got when I kept asking how it all worked was "we just buy and sell phones." Before and after going to the store, while I was with the guy, his group of cohorts discussed the stops they had to make, people they were working with that day, how many phones to get from which locations, how much money they had and needed, and so on. Seemed like a normal, well-orchestrated day for them. That feeling that something's not right woke up with me this morning. And of course I'm not getting answers when trying contacting the dude at yesterday's phone number.

Thank you for sharing your experiences. These are useful details for a complaint.  Please go to to report this. If you enrolled as the account holder with your personal information, you are responsible for the account now. You can tell the contact the website where you saw the post and explain what the advertiser is doing.

I think my cell phone account was used in one of these 'muling' scams. My cell all of a sudden stopped sending/receiving calls & texts on Sunday. I checked my online account (with Verizon) & found that my device was missing from my account. Called Verizon & they asked if I had upgraded to a new phone--I had NOT. They said my account had been upgraded w/iPhone6 & my current device had been disabled. Found out someone in NC (I live in MN) had gone into an Apple store in a mall in Raleigh, NC, gotten an iPhone6 with my Verizon account info, but had not activated the phone yet. Verizon CS was very helpful & got the matter resolved, took the $900+ charge off of my account & helped me reactivate the phone. I just wanted to alert others to the "other side" of this scam, if that's what happened. (This explains why no on is going to report a "stolen" phone...because it was set up under a legit account--mine!!) I am now spending my day setting up fraud alerts etc. instead of playing with my grandkids!! Verizon Fraud Dept rep I spoke with said that the scammers might have my SS# in addition to the cell phone # & account info...oh joy! Off to call SS now...

If someone has mis-used your personal information, go to for tips on what to do.

Thank you for sharing your experiences. These are useful details for a complaint.  Please go to to report this.

If they tell u what time it is u have a choose to do or not so people on playing dumb they got that money and they was happy now they trying act like some missed lead them

I need a cell phone. Is this against the law to ask people kindly to do this ? If I pay them and they are happy with my services, how am I in the wrong ? They're in the wrong for doing it if they don't comply with the agreement, I didn't agree to anything except paying them 100$. And it was verbal at that. Judge Judy, ??

This has happened to me. A "friend" bullied/tricked me into doing this. When I was younger and dumber... I am a victim of this scam. I have completely screwed my credit, disappointed my parents, and now I feel horrible and guilty. I wish I could go back in time and change my actions. Thank you for writing this article, maybe it will help someone who was like me to not fall for this scam. I feel so stupid. I will never forgive myself for being so naive.

I know it's been awhile but did you spend anytime in jail for this ?

So i met this guy who said i can make fast cash if i go with him to the sprint store he pays for everything then he calls , and he does the international cancellation and he says he makes alot of pesos . so he paysme $100 forphone

Suppose you go to the phone store. You use your name and information to get a phone with a contract. Then someone gives you $100 and he takes the phone and leaves. He says he will cancel the contract, but he is lying.

You have $100, but you don't have the phone. You can't cancel the contract because you don't have the phone. The contract has your name on it, so you have to pay the monthly contract fees. If you don't pay the contract fees, debt collectors will call you and your credit record will show that you don't pay your bills.

Was scammed by a man that goes by Austin Carson in Austin, TX. Had someone I know open up 4 lines of iPhones and 1 high end Rolex claiming he’d pay them off.

My wife bought a cell phone through FB Market place for 500 dollars. It seemed legit initially as she called Verizon to check the IMEI number to make sure it was in good standing. Turns out the phone is till under contract with another carrier and we can’t get a hold of the seller anymore. She deleted her FB account all together. We still have the screen shots of the whole conversation with her an address that she provided to her or or boyfriends home. My wife reported this incident through the FBI website as the price makes it a federal offense. I just don’t know what else to do or if anything is going to be resolved. Advice?

I fell into this trap what can I do now the phones are already with me and on my plan :((


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