Q: I was sent a credit card without my authorization. What do I do? My credit report was obviously dinged to obtain one. Will it be dinged again if I cancel?
A: "Dear Lord, the gods have been good to me. As an offering, I present these milk and cookies. If you wish me to eat them instead, please give me no sign whatsoever… thy will be done (munch munch munch)."
Homer Simpson uttered those lines in a 1995 Simpsons episode that's about as ridiculous as the story that Ohio television reporter Kurt Ludlow uncovered not long ago. A viewer asked Ludlow a similar question: why did he receive a Sam's Club Discover card that he never applied for?
Truth in Lending Act allows some unsolicited credit cards
Ludlow learned that the Truth in Lending Act, the law that prohibited unsolicited credit cards, has a pretty glaring loophole. Lenders' prescreening databases have become so sophisticated, some of them can reliably predict your credit score without making a hard inquiry on any of your credit reports.
Ludlow confirmed that Sam's Club's membership terms and conditions permitted GE Capital Retail Bank to send selected members an "opt-out application." Essentially, that application promised customers a new Discover card unless they specifically declined the new account. Shredding what looks like junk mail, under those conditions, results in a fresh line of credit. If you belong to a membership organization, check to see if you were extended credit under this type of promotion.
Keeping watch for mailbox fraud
Let's start with a crazy notion. What if banks could send you an unsolicited credit card, just because you don't answer your mail? And here's something even crazier. What if someone planned on using your identity and your address to carry out a bizarre fraud scheme? In both cases, checking and amending your credit report can save you from unexpected problems getting mortgages or auto loans later in life - not to mention collection letters on accounts you didn't even know you had.
Meanwhile, criminals who learn how to access your mailbox can respond to a credit card application, gaining access to a new account with a verified mailing address. Fraud rings have used this trick to order expensive electronics and jewelry that they can easily fence, without raising red flags at lenders until they max out your account.
You can fight this kind of fraud a few ways. You can call 1-888-5-OPTOUT to opt out of prescreened credit card applications for five years. Then, invest in a mailbox with a one-way slot that locks. That way, your postal carrier should be able to insert your mail, but only you can retrieve it. For even more security, route your financial mail to a post office box or a private mailbox rental facility.
Remove fraudulent information from your credit reports
Whichever kind of unsolicited credit card you received, take the appropriate steps to have unauthorized accounts and inquiries removed from your profile. All three credit reporting agencies let you submit disputes for free. You can also append your credit report with a consumer statement detailing the situation.