What is credit card fraud?
Media reports of credit card fraud are enough to get anyone's attention. And it's good to be cautious. In fact, Statistic Brain reports that approximately 10 percent of Americans have been victims of some form of credit card fraud.
Of course, that doesn't mean you should stop using credit cards. Instead, you should be familiar with credit card fraud so you know how to protect yourself.
How credit card thieves operate
Credit card fraud occurs when someone uses your credit card information without your permission to make unauthorized purchases. According to the Federal Trade Commission (FTC), these are some common ways that criminals end up with credit card data.
- Dumpster diving: Criminals search through your garbage bin in pursuit of bank statements, credit card statements, purchase receipts with personal information or unused credit card applications.
- Theft: This is the old-school method of simply stealing your credit cards from your purse or wallet.
- Skimming: When a person or hidden camera photographs your credit card and watches you enter your pin.
- Phishing: Fraudulent emails or phone calls received from people claiming to represent your bank or credit card company. They ask you to confirm details like your account number, first and last name, Social Security number, account passwords and/or login information.
- Hacked websites: Sometimes, expert hackers break into the private servers of large corporations and steal the credit card information from thousands of customers. Luckily, most companies have heavily encrypted systems to deter hackers.
How to protect yourself from fraud
One of the best ways to deal with credit card fraud is to prevent it from happening to you in the first place. Keep very close tabs on your cards and statements. Never lend your credit card -- or credit card information -- to anyone, including friends or family members.
It's important to know where your credit card statements are at all times. Keep them together at home in a safe place. If possible, opt for electronic statements instead of paper copies. After you no longer need old statements or credit cards, shred them before tossing them out.
Here are some other common sense ways to take care of your credit card and avoid problems.
- Phishing prevention: Don't trust any emails or phone calls that ask for your personal information. Call your bank or credit card company directly to verify any inquiries. When it comes to navigating financial websites, keep those you use on your favorites tab to avoid bogus webpages popping up.
- Check your account regularly: If someone does get ahold of your card information, your credit card statement usually shows it right away. Purchases made from websites or cities you don't visit should throw up an instant red flag.
- Be careful where you shop: Avoid making purchases on a public computer or on public wireless networks. Before buying anything, make sure you trust the site. If you have doubts, investigate first. After making a purchase, always log off of the website.
- Invest in identity theft protection: The Wall Street Journal recommends identity theft protection if you do a lot of online shopping and don't have time to keep an eye on your transactions 24/7.
Identity theft prevention services let you know when large or abnormal charges appear. They automatically submit fraud alerts and put a freeze on your account in the event of suspicious activity. Some credit card companies and banks offer daily account reports and alerts as part of their customer perks. It's a good idea to check what avenues are already available to you.
What to do if you're a victim of credit card fraud
When someone steals your credit card information, the key is urgency. That's because legally once you inform the card company of credit card theft, your liability is limited to $50 and you're not responsible for later charges, according to the FTC. Here are some steps that experts recommend taking right away.
- Call your card issuer and inform it of the situation.
- Contact all three credit bureaus so they flag your account.
- Submit a police report.
- File a report with the FTC.
- Remove any credit card information stored on any online stores.
- Consider hiring a reputable credit monitoring service to inform you of any anomalies.
Editorial Disclaimer: The editorial content is not provided or commissioned by the credit card issuers. Opinions expressed here are author’s alone, not those of the credit card issuers, and have not been reviewed, approved or otherwise endorsed by the credit card issuers.