How to Stay Safe from Credit Card Fraud

Have you ever wondered how credit card fraud happens? When someone finds out your credit card information, they can use it to make purchases without your permission. Maybe they saw your card details at a store by shoulder surfing, maybe they’d placed a card skimmer at the gas pump you used to fill up on your way to work, or maybe they used cyber-technology to get your credit card information online. However it happens, if unchecked and unreported, credit card fraud can wreak havoc on your finances and personal life. So, how do you protect yourself from credit card fraud?

What is credit card fraud?

Credit card fraud is when someone uses your credit card or debit card information to make purchases without your permission or make withdrawals from your account. Criminals can get your card information in a variety of ways, but the most common way is at point of sale (POS) terminals, like when you swipe your card at a gas pump, or online.

Your credit card doesn’t have to be physically stolen for credit card theft to happen. Increasingly sophisticated means of stealing information means that your card information can be stolen without your credit card even leaving your sight, via methods like cloning and phishing. 

Cloning, or creating duplicates of an existing card, is one way that cyberthieves can get ahold of your credit card information without physically stealing it. This is done either by stealing all the information from the magnetic strip on the back of the original card or by obtaining some other type of information (like your Social Security number) that is then used to create fraudulent cards.

Phishing is another method that cybercriminals use to get your credit card details. During a phishing scam, fraudsters send emails or text messages with links to websites that look legitimate but have malicious code. This code is designed to steal any sensitive information you may input onto their website, like login credentials for your credit card account or your Social Security number.

How credit card fraud happens and examples of credit card fraud

There are many ways that criminals can get their hands on your credit card number and other sensitive personal data.

Lost or stolen cards: The most basic way that credit card fraud happens is via a lost or stolen card. This can happen if a thief intercepts a credit card that is being mailed to the cardholder and uses the card to make fraudulent purchases. 

Online scams: In online scams, cybercriminals make it look as though you are making a purchase at a legitimate company, when really you are sending them money for nothing in return. For example, they may send you a link to a special offer that looks like it’s coming from an online store you frequent. You may be tricked into giving them your card number in exchange for a product that does not actually exist. They may even send you a fake invoice or a tracking number to make it seem as though a delivery is actually coming to your address. 

Fraudulent account openings: Criminals can also use your personal information (like your name, address and Social Security number) to take out new credit cards or loans in your name. Often, this type of identity fraud can go undetected until the victim tries to apply for credit themselves. Although victims are not typically responsible for any fraudulent credit card purchases (due to federal law and protection offered by credit card companies), if left unchecked and unreported, this type of fraud may impact your credit score.

Account takeover fraud: Scammers can contact credit card companies pretending to be you to get access to your personal information. If they get into your online account, they can change your password and PIN so that they can take over your financial accounts. This type of identity theft is called an account takeover, and a victim will usually only detect this credit fraud once they try to access the account themselves and find themselves unable to login. 

Public internet access: Public Wi-Fi can be one way you might accidentally expose your information to fraudsters. It’s important to never open sensitive documents or access financial information while you are on public Wi-Fi. Hackers and cyberthieves can access your account numbers and passwords via your browsing on public Wi-Fi. 

Thieves may collect credit card information by using skimming devices at gas stations or ATMs, by going through trash cans, or shoulder surfing (looking over your shoulder as you enter your PIN at an ATM). This is why it is important to keep your credit card with you at all times and check your surroundings before you use an ATM, and to destroy any old or expired credit card information you may have. Additionally, if you see an unauthorized charge on your credit card statement, be sure to report it to your credit card issuer right away. Many credit card companies offer account alerts that will send you a notification if there’s unusual account activity. Signing up for account alerts will go a long way in helping you detect fraud on your account.

What to do if you believe you’re a victim of credit card fraud

If you’re a victim of credit card fraud or a scam, the first thing you should do is contact your credit card company to cancel your card and get a new one. It’s important to contact your credit card issuer as soon as possible. You can typically find the phone number of the credit card company on the back of your card, or you can find it on your credit card issuer’s website. 

Then, report the fraud to the police and your local law enforcement agency. Make sure you keep a copy of the police report, which you may need to send to your credit card company and other creditors.

The Federal Trade Commission (FTC) recommends that you also contact the three major credit bureaus (TransUnion, Experian and Equifax) to place a fraud alert on your credit report. This will let creditors know that they should verify your identity before issuing credit in your name. The alert stays on your credit file for 90 days (about 3 months), although you can request an extension. 

A fraud alert will make it more difficult for someone else to open new accounts in your name, but it’s important to monitor all your accounts closely and report any suspicious activity immediately. 

How you can keep your credit card information safe

There are some ways you can help prevent credit card fraud. Only keep a few cards with you so you’re less likely to lose or misplace a card and keep the cards that you rarely use in a safe place. Report any lost or stolen cards to your credit card issuer immediately.

When you’re online, beware of phishing scams and double-check that any email you receive is from a legitimate company. Remember, don’t share your credit card number or any other sensitive details over email.

Always review your credit card statement and alert your credit card company if you see a fraudulent charge. This is important, even if you aren’t using your credit card frequently. Many credit card companies offer account alerts, that will alert you if they detect unusual activity.

Taking these steps will go a long way in helping you protect your personal information and help prevent credit card fraud. Check out other ways that you can keep your information safe.