How to recognize and prevent credit card fraud

Credit card fraud is a serious risk for individuals and businesses.

Despite measures such as mobile wallet, chip card and Short Field Communication technology, consumers are still at risk of fraudulent use of their credit card accounts.

Below, we’ll explain what credit card fraud is, the steps you can take to keep your card safe, and what to do if the worst happens and your card is stolen.

What is credit fraud?

Credit card fraud is the result of someone Illegal purchases on your credit or debit card account. It could be someone you know who takes your card and makes purchases without your permission, or a stranger who has access to your credit card number or physical card.

Credit fraud can also occur through digital payment methods such as Automated Clearing Houses, electronic funds transfers or mobile wallets — although Google Pay And Apple Pay are some of the safest forms of payment available.

American Express recently conducted a survey about how American Millennials and Generation Z think about cheating. Both age groups – 69% of them – are concerned about fraudulent charges on their bank accounts, even more so than someone hacking their social media profiles.

No matter what age group you belong to, you can keep your credit cards and related accounts safe if you know what to look out for and what to do if one of your cards is compromised.

How does credit fraud happen?

It helps to understand some of the more common examples of credit fraud. These include:

• Your credit card number can be stolen if the e-commerce site where you shop is hacked
• Someone could rummage through your trash looking for your account number
• Someone could get into your account if you sign in over an unsecured Wi-Fi network
• Thieves can use data capture devices attached to point-of-sale payment terminals to access your credit card information if you use the magnetic stripe on your credit card for transactions.

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How can I identify credit fraud?

Banks have introduced specific measures to identify and prevent credit card fraud. Your bank or credit card provider may call you if it detects unusual activity on your account.

For example, let’s say you live in New York and haven’t notified your bank that you’re going on vacation. If the bank detects card activity originating from South Carolinait may hold your card or contact you by phone, email or text message to ensure the purchase is authentic.

Your bank or relevant financial institution may also be contacted if any irregularities are detected make a big purchase or multiple purchases that don’t fit your usual spending habits.

Furthermore, you can set up alerts when purchases exceed a certain amount. But be aware that thieves often process a small payment first to see if they can get away with it. You can also set up your account to be notified of any purchases, regardless of amount.

Finally, reviewing your credit card statements or going online to check activity can help you detect credit fraud promptly.

Related: Credit card fraud: How to detect and report

How to prevent credit card fraud?

The first step in preventing credit card fraud is realizing that it can happen to anyone, no matter how knowledgeable they are. In fact, a thief could access your card information if you made a purchase through a reputable, secure e-commerce site that was later implicated in a major data breach.

It happens. But there are measures you can take to protect yourself:

• Pay with EMV chip cards (tap-to-pay cards developed by Europay, Mastercard and Visa are now the global standard), NFC “contactless” payments or mobile wallets whenever possible.
• Avoid paying by card at businesses that only have magnetic stripe payment systems, if possible.
• Shred all credit card statements before throwing them away.
• Use a secure wireless network when online shopping or access your financial accounts.
• Set up alerts so you can promptly detect if your card is being used fraudulently.
• Don’t give anyone your card information.
• Protect your smartphone and tablet with a password.
• Monitor your credit cards and other financial accounts regularly.

“Level up your mobile security: Help avoid account takeover by using strong and unique passwords for each of your online accounts and change them regularly.” “Whenever possible, download an app and enable two-factor authentication for your online accounts, which adds an extra layer of security by requiring a code, fingerprint or device to verify your identity. Also, be wary of phishing emails or messages and don’t click on any links, open any attachments, or provide account or personal information to anyone. parties about which you are uncertain.”

What is the difference between credit fraud and identity theft?

Some people use the terms credit fraud and identity theft can replace each other. It’s true that credit fraud is a form of identity theft — but credit fraud is typically limited to the violation of a specific account, not your entire credit file. Credit fraud can be costly and time-consuming for victims, but recovering from a credit card fraud case is much easier than overcoming identity theft.

In the event of identity theft, criminals or hackers will have access to your financial information not only to use credit cards or accounts but also to open new accounts in your name.

Once thieves have your social security number and address, they can borrow money, apply for a mortgage, and even buy insurance—such as health insurance or auto insurance—in your name. . When this type of crime occurs it is called “real name fraud”.

Solving an identity theft involves tracking down all the instances where thieves have used your information, proving that you haven’t opened fraudulent accounts, and closing them. It can take years to recover from identity theft.

Related: Credit card fraud and identity theft – how to tell the difference

What should I do if I am a victim of credit fraud?

Luckily, recovering from credit card fraud is easier than dealing with an identity theft case.

If you discover you’ve been a victim of credit fraud, the first thing to do is contact your bank and report the fraudulent charges. Review your statements to make sure you report all fraudulent charges and make sure you can account for any purchases made with the card in the past two months or so.

Under federal law, you will not be liable for fraudulent credit card charges over $50 as long as you report them within 60 days. Visa, Mastercard, American Express And Detect all have a zero liability fraud policy. If you report fraudulent charges promptly, you may not have to pay any of them.

Similarly, the Electronic Funds Transfer Act limits your liability for debit card fraud to $50 if you report the charges within two business days, or $500 thereafter. Your credit card issuer may recommend that you file a police report about fraudulent activity.

If thieves stole credit card information from one of your accounts, it’s likely they also had access to another account. So check all your accounts for fraudulent activity.

Finally, change your passwords on any financial accounts and e-commerce sites like Amazonwhere you can store your credit card information.

Bottom line

Once you have taken immediate action to prevent additional fraudulent activity, request a copy of your login information credit report from all three credit bureaus to ensure fraud does not extend beyond credit fraud to identity theft.

As security measures increase with the advent of mobile payments, EMV chip cards and contactless payment systems, thieves are also getting more creative.

Monitoring your accounts and acting quickly if you spot unusual activity is still your best bet for avoiding the stress and hassle of dealing with credit fraud.

Related: So you’ve been a victim of a scam: 5 steps to take when your personal information is compromised