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"Green Dot" Cards Are Convenient - But Beware of Scams

A better option to pre-paid debit cards.

You've probably seen "Green Dot" pre-paid debit cards at outlets like Wal-Mart and CVS. You can buy a card worth, say, $50, and use it anywhere that takes credit cards. The "off the rack" cards are not rechargeable. But you can get a permanent card that you can recharge - for a fee, of course.

These cards are not good substitutes for a regular checking account at a good credit union - or even at a higher-fee bank. The ongoing fees for recharging your card - up to $5.95, compared to free direct deposits and online transfers at most traditional financial institutions - can really add up if you use these often. But in some circumstances, they come in handy for convenient gifts. Some people also use them for online purchases - to conceal their real credit card numbers from possible scammers.

All financial products have their place. Unfortunately, scammers are targeting the unwary - and dragging Green Dot and other similar services into the crime.

The Power Bill Scam

One scam goes like this: The unsuspecting victim receives a call from someone claiming to be from the local power company. The scammer tells them that the power is about to be shut off. To avoid the shut-off, they're instructed to buy a pre-paid Green-Dot card, and then call another number to pay online.

The utility companies have nothing to do with this. The scammer is long gone with the money - and you won't get any credit for payment on your power bill!

The Bogus Grant Scam

Another scam uses a powerful lure, according to Scambusters.org - a Website devoted to exposing frauds and scams. The mark receives a check in the mail-often for thousands of dollars-along with a letter informing them that they've received a grant. They frequently camouflage themselves as government agencies or religious organizations. The letter instructs them to deposit the check, and then transfer a "finder's fee" to a Green Dot account. The mark deposits the check, sends money back to the scammer, who, naturally, disappears. Meanwhile, the check bounces, and the victim is out whatever he sent to the scammer - with a returned check fee for good measure.

The bottom line: Use caution whenever you send money to anyone you know. Do your homework. And you know what they say about things that sound too good to be true.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

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