Credit Muling – Understanding Credit Muling And Its Effects

What is Credit Muling?

Creditmulingis a credit fraud where a customer of a bank uses his or her own name and information to obtain high-value loans with no intention of paying back the loans. It is also known as first-party fraud. It can also involve acquiring and delivering items fraudulently obtained with the use of credit. A credit mule transports items obtained dishonestly which have been purchased on credit. Now, credit mules may not be aware that they are participating in a scam and may indeed think that they are working in good faith as an employee or independent contractor of a legitimate contractor, just like secret shopper business.

Credit Muling

Understanding Credit Muling

Most high profile examples of credit muling have involved cell phones. Criminals pay people to acquire new, high-value phones. Which are sold at a discounted price. Or are free when the consumer agrees to a cell phone contract. The full price of the phone is factored into the contract. And is also included in the bill for each month of the contract, which often lasts for two years. Once the customers buy the contract phone, she turns it over to the criminal. Who resells the same for full price or for even a higher price on the black market.

Now the credit mule may think she is being paid as a secret shopper and might be told that her employer will cancel the cell phone contact. In another instance, the employer tells the credit mule that it is her responsibility to cancel the credit mule. In either case, the credit mule will eventually get to know that she is on the hook for the value of the phone. She can no longer return the phone to the cell carrier neither does she have the phone. She may also be liable for monthly service charges and early termination fees.


Now, these criminals that are running these scams mostly target young, naïve, or desperate people to become their mules. These innocent mules, use their good credit in obtaining the phones, get paid a couple of hundred dollars cash for their work, only to discover later that their credit has been damaged and they have unknowingly participated in organized crime.

It is difficult for merchants to detect this type of fraud when it’s happening. This is because credit mules use their real identities in obtaining the item. Thus, many merchants end up charging off these losses.

Individuals who suspect or who are a victim of credit muling schemes can notify the police and the Federal Trade Commission.

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