Identity theft is one of the common fraud tactics, mostly through the misuse of a credit card. It often leads to unauthorized transactions, which accounted for nearly 14% of all customer complaints on frauds in 2017. In a report by Javelin Strategy and Research, the highest credit card fraud tactic was recorded in 2017, where 16.7 million people were victimized. This is expected to increase to $10 billion in the United States alone by 2020.
Every year millions of U.S. citizens fall victim to the credit card fraud that wreak havoc on their personal finances.
What is credit card fraud?
When someone uses your credit card for any unauthorized transaction without your knowledge, it leads to credit card fraud. This can happen in two ways –
When you lose your credit card, it can be used online or in-person to make an unauthorized transaction.
Fraudsters also steal your credit card credentials and can do unlawful or unauthorized transactions.
What is identity theft?
Identity theft is the act of stealing and misusing information about you, like your full name, date of birth, social security number, credit card number, bank details, etc. Fraudsters use this information to use your credit card or create a new fake account to perform illegal transactions.
Types of credit card fraud
Fraudsters follow various techniques to steal your personal information and misuse your credit card. Here are the different types of scams:
Credit card theft
Your ignorance can put you in great trouble. For example, while paying on a purchase counter, if you forget to put your card back into the closed pouch or left it unattended, fraudsters can take advantage of this moment. As soon as you realize that you are missing a card, immediately notify your credit card company.
Losing a credit card
It is possible to misplace your card. It is also possible for the person who finds it to misuse it. Always report your missing or lost cards to the credit card issuer and get it blocked so that whoever finds it cannot access and take advantage of your credit balance.
Scammers can obtain your credit card account details with the help of a device called “skimmer.” With this data, they can illegally duplicate your card. The latest chip-and-PIN, i.e., EMV technology, which many credit card issuers are adapting, can reduce this type of fraud.
Criminals can go beyond just stealing your credit card. After obtaining your personal information, they can contact your credit card company under false pretenses and claim to have lost the card and request to issue a new one on the changed address.
Lost cards in transit
Credit card companies try their best to ensure that the right person receives the card and to protect cards in transit, but there are many cases where cards have gone missing from mailboxes. Always demand that the card be handed over to you directly, and not be left in the mailbox.
No physical card
The introduction of EMV technology has reduced point-of-service fraud but has enabled easy online transactions using basic information. However, this has opened a new form of scams. With the cardholder’s name and card number, a fraudster can use the card for online fraud.
Identifying Credit Card Fraud
Be vigilant and follow the signs that fraudsters leave behind:
- Review your monthly credit card billing statement for unknown transactions.
- Scan for bills from unfamiliar sources for accounts that don’t belong to you.
- Track messages from your credit card supplier for any unfamiliar queries like a change of address, request for a new card, blocking the current card, etc.
- Enroll in an identity theft protection service.
Are you a victim of credit card fraud?
You may be a victim of credit card fraud, even when the card is with you. To avoid facing consequences, it is important to monitor your credit card accounts. If you discover fraud on your credit card, you should immediately take the following action:
- Report the loss, theft, or unauthorized transaction to your credit card company. Credit card companies also offer zero-liability policies, which means you won’t be liable for any fraudulent transactions on your accounts. According to federal law, if someone uses your stolen credit card before you realize and report, you will be held responsible for only $50 of any fraudulent charge. The law also states that if you report the loss before the card is misused, you will not be liable.
- Regularly update your PIN and password to prevent credit card fraud.
- Monitor account activity if you are not sure how your information was compromised.
- Even though you have blocked access to your card, it is advised to keep an eye on your bank statements and report any signs of fraud, if noticed.
- Request a credit report. A sign of fraud will first reflect on your credit card statement and later on the credit reports. When you report fraud, you will get a copy of your credit report to verify. In case of any fraudulent inquiries on your credit report, contact your creditor in-person.
File a missing report with police and document all legal formalities that you have made with creditors, credit bureaus, and other authorities regarding the crime. In case of theft of your wallet or purse, immediately notify your bank or credit card company. You can also file a report with the Federal Trade Commission about identity theft.
Note: In case you lose your Social Security card, ensure that it is reported to the Social Security Administrator and place a fraud alert on your credit card too.
Preventing Credit Card Fraud
Alt-text: prevent credit card fraud
Although it’s not possible to completely overcome the possibility of eliminating credit card fraud, there are certain precautionary measures that you can take to keep yourself secure from fraudulent incidents:
- Always carry only those cards that you really need.
- Check your wallet or purse when traveling. Ensure that you collect your card before leaving a billing counter, ATM, or fuel station.
- Shop only from reputable websites or vendors when shopping online. For example, check that the web address begins with ‘https.’ The ‘s’ stands for ‘secure.’
- Never share your credit card number or personal information with someone on the phone, unless you are certain of the source.
If you become a victim of a credit card fraud, despite taking all the necessary precautions, remember, you are not alone. Always report the incident for assistance.
Raise Awareness and Stay Secure
With October being the month of cybersecurity awareness, let us practice the tips mentioned above to keep ourselves secure from cyberattacks. EC-Council offers Certified Secure Computer User (C|SCU) certification, developed for all computer users. The C|SCU credential delivers training on all the required practices and safety measures that every individual should follow to secure their system and network.