Seems like there is a new catch phrase for each new scam, the new phrase that’s popped up is “Credit Mule.” A credit mule is someone whose credit and identity is used by scammers to acquire a phone (smartphones usually).
Here’s how the scam works:
The scammer asks a consumer to buy a cell phone and sign up for a wireless plan (usually you get a discount on the phone when you sign up for the plan). The consumer then gives the phone to the scammer in exchange for some cash (usually a few hundred dollars). The scammer then tells the consumer that they can cancel the wireless contract.
Unfortunately, most wireless contracts are for several years and without the phone to return the contract may not be able to be cancelled. The consumer is then stuck with the contract (and no phone) which may damage their credit report if the contract is not paid on time and in full.
The scammer takes the phone and unlocks it and sells it for a profit.
One scammer allegedly pretended to be a loan company – offering a loan in exchange for the phone. Other scammers just use the lure of the money to get consumers to buy the phone and sign up for a multi-year contract.
The Federal Trade Commission states that most victims are college students or others in need of fast cash. As long as the victim has credit to sign a cell phone contract they are vunerable.
While the term credit mule is fairly new the concept of unlocking phones and selling them isn’t. In 2013 the US Secret Service recovered 5300 phones and $800,000 in cash when thieves used stolen IDs to sign 2 year contracts and then sold the phones.
In fact, cell phone providers are working with investigators and lawyers to pursue the phone traffickers.
BBB TIPS: If someone offers you cash to sign a contract – just say no! If someone wants you to purchase something for them for cash because they can’t do it – realize that there is often big risk.
If someone tries to scam you, contact the BBB. If you think someone is trying to scam you, call the BBB! bbb.org, 801-892-6009 or email@example.com