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Don’t Be a “Credit Mule”

Don’t Be a “Credit Mule” - The Beacon


By: Amanda

Don’t Be a “Credit Mule”

Your BBB has learned of a new scheme the Federal Trade Commission is calling “credit muling.” This scheme is just a new way to prey on those that need money quickly, often college students. The FTC defines credit muling as the “use of someone else’s identity, personal information and credit to get something of value.” In this case, the items of value schemers are attempting to obtain are smart phones, tablets and other electronic devices.

According to the FTC, the scheme goes like this: the schemer will approach an individual (the mule) and ask them to buy several cell phones each under a separate contract. The schemer will then pay the individual (or mule) for the devices and remind them to cancel each contract within the time allotted by the cell phone provider. The schemer will then take each device and “unlock it.” An “unlocked” device can be used with any carrier, and according to the FTC, can be sold on the streets for hundreds or thousands of dollars.

Here’s the catch: the “credit mule” can’t cancel any of the contracts they opened without the device so they are on the hook for the device and the monthly charges for the length of each contract. Unfortunately, if the “mule” can’t pay, the debt will go into collections and will in turn affect their credit score.

If you are approached for this type of scheme, gather as much information as you can about the schemer, and report them to the FTC and your BBB. If you believe you have been a victim of this scheme, contact the FTC.

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Amanda is the Director of Bureau Affairs and is a regular contributor to the consumer education blog. She is one of our go-to colleagues for answering complex consumer inquires. Amanda also manages our charity reporting program.