What is credit card fraud?
Credit card fraud is a type of identity theft in which an individual’s credit card information is used in an unauthorized manner for fraudulent purposes. It is a very common type of fraud which happens in a variety of ways.
It may be due to physical loss of the card which happens when the card is lost or stolen. Or it may be due to theft of personal or credit card details. In this fraud, the criminal steals another person’s information to steal his identity and use his money.
How Does Credit Card Fraud Happen?
Credit card fraud falls into different categories depending on the way the fraud is committed. It can happen in the following ways:
- Account takeovers
As the name suggests, this involves hacking of an existing credit card account of a person by stealing his/her account details. The thief obtains credit card details of the victim to make online purchases or acquire different services.
- Credit card skimming
It is a variation of account takeover. In this, criminals read credit cards’ information illicitly using skimming devices. These skimming devices are employed in credit card readers and the information is read while swiping the card. The criminal then uses the information directly or creates a new fake credit card using it. This fake card is then used for malicious purposes. As it does not involve the physical loss of the card, therefore, it is not recognizable at the earliest.
- Application fraud
In this fraud, the thief steals personal details of a person to open new credit card accounts in his/ her name. It involves the thief creating fake documents to apply for credit cards using another person’s identity. It has a more serious impact than account takeover as it is not easy to identify it.
How do thieves acquire your information?
Identity thieves can acquire information by:
- Physically stealing your card.
- Stealing your mails from your mailbox.
- Going through your trash (dumpster diving).
- Taking a sneak peek while you type your account details (shoulder surfing).
- Sending unsolicited emails (phishing).
- Obtaining your card details from hacked websites of major companies (high tech hacking).
What are the signs of credit card fraud?
Look for the following warning signs to find out if you are a victim of credit card fraud:
- Finding strange charges on your billing statements.
- Receiving bills from unknown or unfamiliar sources.
- Getting unknown calls from creditors or collection agencies.
- Finding inquiries about accounts that you did not open in your credit report.
What steps can be taken to prevent credit card fraud?
Incorporating the following practices into your daily life and prevent yourself from credit card fraud:
- Protect your wallet, purse at all times and never leave it unattended in public.
- If possible, carry your cards separately from your wallet as this minimizes your losses if someone steals your wallet.
- Carry only those cards which you really need.
- Try to minimize your card usage.
- Don’t lend your credit card to anyone else – even your family or friends.
- Inform your card issuer if you are going on a holiday.
- Don’t provide your credit card number to anyone on the phone unless you’ve made the call.
- Save your card receipts so they can be compared with your statements.
- Keep a record of your card numbers, their expiration dates and the emergency phone number to report fraud in the case of theft.
- Never leave your cards, receipts, or statements just anywhere. When you don’t need them, throw them only after shredding.
- Whenever you make a transaction, keep an eye on your surroundings and make sure no one is looking over.
- Ensure to take back your card after making a purchase.
- Notify your card issuer if your change your address.
- If you regularly bank online, don’t use your web browser to automatically fill in your details while logging into the website.
- Monitor your credit card account online for unauthorized charges between statements by enrolling at the bank’s website.
- Inform the card issuer immediately if your credit card bill arrives late as a missing bill may indicate that your identity is at risk.
- Be cautious of credit card protection insurance offers. Scam artists try to convince people to buy credit card insurance. According to a recent study by Federal Trade Commission (FTC), 3.3 million consumers have bought unnecessary insurance to prevent unauthorized use of their credit cards.
- Make sure you are using a secure website and check that your browser is in the secure mode before making a purchase. (Look for the padlock sign in the lower right corner of your browser window.)
- Use identity score services to know when your identity is compromised.
Taking appropriate security measures in your day to day life and using your card safely can help you protect from credit card fraud.