The credit card industry has always been targeted by hackers and thieves, and that is unlikely to change any time soon. Unfortunately, the most common scams have changed right along with technology, which means scammers are always coming up with new tricks that catch the general public off guard.
According to a 2021 identity theft study from Javelin Research, scammers have mostly graduated from counterfeiting credit cards to more significant crimes like identity theft and savings account takeover. In the meantime, criminals have increasingly started targeting consumers directly with scams that aim to get them to reveal personal information that lets the hacker take over their identity.
While nobody knows for sure what the future holds, it’s safe to say financial scams cause headaches and financial losses. Still, you don’t have to be a victim if you’re careful. Read on to learn more about some of the biggest credit card scams to watch out for in 2022, as well as how you can protect yourself.
Identity fraud scams
Where criminals once focused on perpetrating fraud at an institutional level, data collected from Javelin Research shows that hackers are focusing more and more on ensnaring individual consumers with scams. Many times, individuals wind up communicating with criminals via email, text message or phone, which has been easier to accomplish as more people stayed home during the pandemic.
“Criminals follow current events, and unfortunately the pandemic has provided them a host of new storylines to employ online,” said Kathy Stokes, director of the AARP Fraud Watch Network in a press release. “Helping consumers know how to spot the red flags of scams is an important step in stopping fraud before it has a chance to happen.”
According to the experts, identity fraud scams can sometimes be avoided if you know what to look for. For example, you should be wary of any company contacting you via phone, text or email for any reason. Experts at Javelin Research also say to watch out for “misspelled email addresses, suspicious requests for money or random messages through social media from criminals claiming to represent a financial institution.”
Digital payment scams
While the pandemic kept more people at home where they were more vulnerable to identity fraud scams, COVID-19 also resulted in more people using digital payment products than before. Of course, hackers and thieves never miss an opportunity, and they shifted their behavior to keep up with this trend.
According to Javelin Research, losses related to digital wallets and peer-to-peer (P2P) accounts have spiked. “This was particularly notable in the case of economic stimulus payment fraud, unemployment benefits fraud and identity fraud scams,” they write.
Credit card interest rate reduction scams
Credit card interest rate reduction scams take place when a caller implies their company has special relationships with card issuers that can help secure lower interest rates. The Federal Trade Commission (FTC) says consumers who receive a call like this “should listen to them with extreme skepticism, and delete them.”
Why? Because by and large, robocalls promising to lower your interest rates are always fraudulent.
No matter what a company claims, nobody can do anything for your interest rate that you cannot do for yourself. If you want a lower interest rate from your card issuer, the FTC recommends calling your issuer and asking for one.
According to the FTC, individuals who are tricked into paying third-party companies to get them a lower interest rate never see the promised savings and struggle to get refunds. Not only that, but giving one of these companies your credit card information leaves you open to other types of scams, like them using your credit card number to make fraudulent purchases.
According to Chris McHargue, principal financial services industry consultant for fraud at SAS, phishing schemes have been around for a long time and remain a significant problem. While phishing can take on several different forms, it usually occurs when a fraudster contacts the target victim by phone or, increasingly, online via some social engineering scheme in order to extract card, account or banking credentials or other personal details.
The original contact may look like an email from a company you use, or you might get a phone call that sounds legitimate but asks you to give your personal information or credit card details.
McHargue says this information is then used to commit fraud over the internet, using card details for e-commerce transactions or banking credentials to move money via online banking.
“They may even open credit card accounts in the victim’s name,” he says.
These types of schemes often target senior citizens who may be less familiar with technology and thus more vulnerable.
Social Security benefits scams
According to Ahren Tiller, an attorney at The Bankruptcy Law Center, another credit card scam to watch out for involves any Social Security benefits you receive. Tiller says scammers may call pretending to be from the Social Security Administration and say one of two things:
- You were overpaid benefits and you need to pay some of the money back via a credit card.
- You were underpaid benefits and they need your bank account information to deposit more money into your account.
In either case, the scammer is hoping to get their hands on your credit card details or bank account information. However, there are a few red flags to look out for. For example, they might rush you and demand that you provide them with personal information or your Social Security number immediately, and this is never a good sign.
They may also try to trick you by using fake caller IDs or official-sounding names, says Tiller. Additionally, scammers may ask for payment in order to receive your benefits or give you a phony bank routing number to deposit your benefits into.
“If any of these things happen, it’s likely that you’re speaking with a scammer and you should hang up immediately,” says Tiller.
Government imposter scams
Another scam to watch out for takes place when a criminal pretends to be an employee of the Federal Deposit Insurance Corporation (FDIC) or other government agency. In some cases, they might even use real names of government officials in order to seem more legitimate.
The FDIC points out that the agency does not send unsolicited correspondence asking for money or sensitive personal information.
“Also, no government agency will ever demand that you pay by gift card, wiring money or digital currency,” writes the FDIC. “The FDIC would never contact you asking for personal details, such as bank account information, credit and debit card numbers, Social Security numbers or passwords.”
How to protect yourself from credit card scams
While there are numerous credit card scams to watch out for, there are just as many ways to avoid them. These tips can help you avoid being a victim of credit card scams and other types of fraud:
- Sign up for free credit-monitoring services. Credit-monitoring services provide methods to monitor and alert you of any activity on your credit report. And note that AnnualCreditReport.com lets you look at your credit reports from all three credit bureaus for free once a year, which is a good way to stop fraud early on. Additionally, the three bureaus are offering free credit reports on a weekly basis through April 2022 due to the pandemic.
- Routinely check your bank statements. “You may find charges for $0.01 or very low dollar amounts,” says McHargue. “This is a common tactic used by fraudsters to validate your account.” Once scammers confirm the card details work, and that the charge went undisputed, they then use them for larger charges.
- Freeze your credit. When you freeze your credit report with each of the credit bureaus, nobody can open new accounts in your name—not even you. Don’t worry, you can unfreeze your credit reports when you need to.
- Set up alerts on your credit accounts. Setting up alerts means you’ll be notified when a purchase is made on an existing account. If you didn’t make the purchase, you can notify your bank and take steps to cancel it and secure your account right away.
- Be careful using public internet access. Nishank Khanna of Clarify Capital says unsecure internet connections will put you at risk of having your personal information stolen. “Some especially cunning thieves may capture your information by generating a pop up on your screen for you to input your card information or stealing your saved card information off your computer,” he says. If you’re frequently using public internet access, it makes sense to pay for a virtual private network (VPN).
- Set up multi-factor authentication. Credit card accounts and other financial accounts with multi-factor authentication can protect you from fraud. You’ll have an extra step when you log in, such as retrieving a code via text or email, but this makes your accounts more secure.
- Avoid phone solicitations. Tiller says avoiding telephone solicitations completely is not a bad idea. “If you receive a call from an unknown number, don’t answer it,” he says. “Legitimate governmental agencies do not solicit information over the phone unless you have initiated contact with them first.”
What to do if you think you’ve been scammed
The good news about most types of credit card fraud is that consumers are typically not on the hook. Thanks to protections in the Fair Credit Billing Act (FCBA), consumers are limited to $50 in liability for fraudulent charges, although most credit cards come with $0 fraud liability policies.
If you think you’re the victim of a credit card scam or your information has been compromised, however, you’ll want to notify your card issuer as soon as you can. A customer representative has the power to freeze your account or cancel your card entirely. At that point, your lender will typically launch an investigation and reimburse you for any lost funds. However, this is only the case if you spot the fraud and report it within a reasonable timeline, generally 60 days.
Still, just canceling your card may not be enough since your information may have been compromised as well. As a result, you should keep a close eye on your credit reports to ensure nobody is fraudulently claiming your identity and opening up fake accounts.
If you find fraud on your credit reports, the Consumer Financial Protection Bureau (CFPB) recommends placing a fraud alert on your credit reports from all three bureaus. You can also consider freezing your credit reports with Experian, Equifax and TransUnion, which you can do for free.
Finally, you should report any scams you encounter to the FTC since they can use this information to spot trends, build a case against criminals or educate the general public.
“If you were scammed, report it to the FTC at ReportFraud.ftc.gov,” the FTC advises.
The bottom line
You can protect yourself from scams by keeping an eye on your accounts and credit report, being skeptical of phone calls or social media messages from someone asking you about your accounts or pretending to be from your bank and keeping your personal information, including credit card details, secure. If you find that some of your information has been compromised, report it to your issuer immediately to have the account closed, file a report with the FTC and potentially with local law enforcement.