Credit card fraud is on the rise around the world. Fraud-related losses from all card types — credit, debit and prepaid cards — is expected to reach $27.69 billion this year.
Most losses occur via counterfeit cards used at ATMs or point of sale terminals. Fortunately, federal law states that credit card users are not liable for more than $50 in fraudulent charges to their credit cards if they report those charges to card issuers within two days of learning of them.
But, this does not remove the financial risk. Fraud can be costly when banks or cardholders don’t detect it right away. Here’s how to prevent credit card fraud.
Avoid giving payment data to online retailers
Often, people provide payment information to online retail stores to expedite the checkout, but it puts them at risk of becoming a fraud victim.
That’s because credit card information is stolen through data breaches and hacking. When buyers allow their payment data to be saved on a website’s server, they are at the mercy of that website’s security standards.
Even large companies have been victims of security breaches. Poor encryption, coding and security training are some of the reasons a buyer’s credit card data are at risk.
Once thieves and hackers steal credit card information, they can use it to purchase products from online stores. In many cases, card numbers are used for several months after being stolen.
To protect yourself from identity theft, it is smart to request a new card immediately following a security breach at a retailer, even if there is no suspicious activity on the card.
Check credit card statements regularly
Credit card users sometimes don’t read through their monthly statements, and they think credit card fraud is always obvious. Instead, the spending can be small, and this makes them hard to detect without paying better attention to your statement.
Some people also assume that banks will catch fraud. While computer algorithms that catch online fraud have improved over the years, they’re still not full proof. For instance, some small regional banks and other financial institutions may not be as quick to notify their clients of suspicious activity.
Consider credit cards with EMV chips
Over the years, credit cards have become a lot more secure with the introduction of EMV (Europay, Mastercard and Visa) cards. These cards have embedded microchips that make credit cards harder to copy compared to old magnetic strip cards.
Still, not every credit card has an EMV card chip. Request a new credit card with a chip if your issuer starts updating its credit cards.
Even if you switch to this type of card, EMV chips don’t guarantee protection, so it is important to be vigilant when using credit cards.
Beware of credit card skimmers
Another way to protect yourself is to beware of credit card skimmers. A skimmer is a device designed to steal data from a credit card with a magnetic strip. The devices fit over credit card slots on ATMs and payment machines.
Once the card information is collected on the device, thieves can download the information to create a clone of the card, which they can use for fraudulent credit card use.
To protect credit cards from skimmers, it’s good to become familiar with the look and feel of ATM machines. Check the ATM and the area around it for signs of tampering or a different color or material around the card slot from the rest of the machine. Report anything unusual immediately to police.
Report losses and fraud
The Federal Reserve Bank of Philadelphia recommends that people who suspect fraud should contact the bank that issued the credit card as soon as possible.
In the U.S., as soon as a credit card user reports suspected fraud, he or she typically becomes liable for no more than $50 of the unauthorized charges. Notifying the card issuer to report fraud ensures the compromised card is immediately blocked, and you are not liable for further charges made.