What Is Credit Card Fraud?

What are some types of credit card fraud?

Understanding common tactics that fraudsters may use to access your credit card may help you take thoughtful precautions and identify potential issues quickly. Look out for signs of the following tricks.

Credit card cloning

Credit card cloning is when fraudsters create duplicates of an existing card. A thief may steal the information from the magnetic strip on the back of the original card or obtain your personal information (like your Social Security number). The criminals use this info to create fraudulent cards.

Phishing

This is another method cybercriminals use to steal 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 captures any sensitive information you may enter on the website, like your account number, login credentials for your credit card account, or Social Security number. The criminals may then use this information to make an unauthorized transaction with your card.

Lost or stolen credit cards

A lost or stolen credit card may lead to identity theft and credit card fraud. A thief could find a card or intercept a card in the mail, then use it to make fraudulent purchases.

Fraudulent account openings

If criminals get access to your personal information (like your address, credit card account number, and Social Security number), they may use it to open new credit cards or apply for loans in your name. This identity theft might go undetected until you try to apply for credit yourself.

Account takeover fraud

Scammers could contact credit card companies pretending to be you to get access to your personal information. If they gain access to your online account, they could change your password and PIN, then take over your financial accounts. This type of identity theft is an account takeover. A victim usually only detects this credit fraud once they try to access the account themselves and can't log in.

Credit card skimming devices

Thieves may collect credit card information by using credit card skimming devices attached to card readers at a fuel pump or ATM. Skimming devices may have noticeable alignment issues or look different from surrounding terminals.

Public internet access

Public Wi-Fi could expose your information to fraudsters. Avoid opening sensitive documents or accessing personal financial information while using public Wi-Fi.

How can you prevent credit card fraud?

Some basic security practices may help you keep your credit cards and personal information safer from fraud.

• Keep your cards in a safe place. Avoid carrying your credit card in your back pocket, as it may fall out and get lost when you sit down. At home, consider keeping your credit cards in a locked drawer. 
• Protect your credit card details. Try not to expose your credit card number at the checkout counter. If you’re using your credit card to get a cash advance at an ATM, make sure to conceal your PIN number.
• Beware of scams. Don’t click links you receive from unknown phone numbers, social media accounts, or email addresses. If you receive a strange message from someone you know, contact them to make sure their account hasn’t been hacked.  
• Be careful with your information. Don’t share your credit card number, Social Security number, passwords, or other sensitive information over email, text messages, or social media.
• Set up account alerts. Your bank or card issuer may notify you of any strange activity if you activate fraud alerts on your account. 
• Report lost or stolen cards to your credit card issuer. If you can’t find your credit card, you may also be able to lock it through your online credit card portal or mobile banking app. 

How do you report credit card fraud?

When you notice strange activity on your credit card statement, how do you respond? Do you reach for the phone? Cut up your cards?

Don’t panic. While it’s important to take action quickly, a few simple steps may go a long way in protecting yourself and resolving the issue.  

Confirm the charge is fraudulent

Before you report fraudulent activity, you may want to make sure the purchase in question isn’t legitimate. An unfamiliar transaction may appear on your credit card statement for a number of reasons. For example, a retailer may bill using a different business name, or an authorized user on your account might make a purchase without informing you.

If the transaction doesn’t match any purchases you or another person with access to the account has made, proceed with reporting the fraud.    

Contact the card issuer

It’s generally a good idea to contact your credit card company as soon as you’re reasonably sure someone has accessed your account without permission.

Gather all the information you have about the transaction to streamline the investigation process. Your card issuer may ask for the retailer's name, the date of purchase, the purchase amount, and any other relevant information.

Credit card issuers may have different processes for reporting fraud. For example, Discover cardmembers may call 1-866-240-7938 or dial the customer service number on the back of their credit cards to talk with a credit card fraud specialist.

When fraud is suspected, your issuer may lock your account immediately to prevent further unauthorized activity and send you a new card. Your card issuer may also provide you with instructions for destroying your current card if you still have it in your possession.

Next, the card issuer’s fraud team begins an investigation into the fraudulent transaction or transactions. Depending on the severity of the situation, your card issuer might recommend involving other authorities, like the police or FTC. 

Place a fraud alert on your credit report

For additional security, you may ask the three major credit bureaus to place a fraud alert on your credit report. The FTC defines a fraud alert as a note on your credit report asking businesses to contact you directly to verify your identity before opening a new account in your name.

Monitor your credit

Even with other measures in place, it’s essential to monitor your statements and credit reports closely. If you notice any suspicious transactions, report them right away. Some credit card companies may offer security tools to help you catch fraudulent activity quickly.

The bottom line

Credit card fraud may have a big impact on your finances and cause a lot of stress if you don’t address it quickly. Staying informed about credit card fraud and taking credit card fraud prevention steps may go a long way to minimize your risk.

If you do become a victim of fraud, remember that you don’t have to take it on alone. Your credit card issuer is there to help you. Plus, credit cards often offer security features to keep you safe even after a fraud has occurred.