June 25, 2024

Regrettably, incidents of credit card fraud are on the rise. Particularly for travel enthusiasts who leverage credit cards to gather points and miles, it’s crucial to comprehend how fraud occurs and the optimal strategies to safeguard yourself.

Despite the initial thrill of noticing an additional $30 in points on your credit card, the excitement quickly evaporates when a $1,000 expense surfaces that you didn’t authorize and are unwilling to cover!

To deter credit card fraud effectively, it’s important to learn the steps credit card companies take when confronted with fraud, the protocol for addressing it, and your own rights and obligations in relation to unauthorized transactions.

This guide will also demystify the various types of fraud you could potentially face, ways to identify these fraudulent activities and the appropriate authority figures to report these incidents to.

What Constitutes Credit Card Fraud?

The primary definition of credit card fraud is the unlawful, unauthorized use of your credit card to secure goods without payment or draw funds from your account via cash withdrawal.

Commonly, credit card fraud could form part of a larger scheme involving theft of your identity, where your personal information is misused to procure new loans or credit lines under your name. We will delve into differentiating credit card fraud from identity theft below.

Does Credit Card Fraud Equate to Identity Theft?

To put it simply, credit card fraud relates to a specific instance of identity theft and could occasionally be a component of a more extensive fraud scheme. Below are several distinct characteristics you should be mindful of:

  • Size and Scope — Credit card fraud could be limited to a single or a pair of unauthorized transactions executed using stolen details. In contrast, identity theft frequently involves a larger scope, wherein multiple pieces of information making it simpler for criminals to impersonate you (like your residence, Social Security number, birth date, banking details, and more) are stolen.
  • Financial Liability — Many credit card companies do not hold you accountable for transactions conducted using stolen card information due to their robust internal measures to prevent fraud. Those that do insist on a limited liability, typically around $50. However, since identity theft involves multiple channels leading into your personal life (including banks, telecom companies, government records, insurance agencies, etc.), receiving comprehensive compensation for potential damage could be more complex.
  • Potential Impact — While credit card fraud’s impact is typically contained within the compromised account’s information, identity theft could cause more severe damage. The repercussions from identity theft can persist for a lifetime. For instance, your Social Security number, insurance details, and multiple addresses can be exploited as criminals impersonate you to establish illegitimate financial accounts or incur debt under your name.
  • Ease of Correction — Once identified, credit card fraud can usually be rectified within a few days by simply getting in touch with your card issuer. If an unauthorized transaction has been executed, it will generally be reversed; the card will likely be deactivated, and you will be issued a new one. However, completely cleansing all your accounts (and personal info) from instances of identity theft can span years. You might need to deal with banks, insurance companies, debt collection agencies, and potentially even law enforcement.

How To Spot Fraud

The most dependable way to identify credit card fraud before it escalates is to diligently monitor all your accounts and credit reports. Multiple free credit monitoring services such as Credit Karma and Credit Sesame are available to assist you with this.

Although you could opt to subscribe to comprehensive services that monitor your credit on your behalf, it’s usually not needed if you use credit cards responsibly and stay on top of all your accounts. If you’ve fallen prey to a comprehensive identity theft case, though, this investment could be worthwhile.

Having difficulties remembering to oversee your accounts yourself? An effective tactic is to disable auto-pay to ensure you actually review your statements each month instead of automatically clearing the entire bill. Yes, this requires a bit more effort — but it’s well worth it to detect fraudulent activity at an early stage!

If you notice odd entries on your credit report or a transaction you can’t recall, you should contact your card issuer without delay. Although credit card companies are continually improving at identifying fraudulent trends, it’s always beneficial to employ multiple checks — their algorithms are yet to achieve perfection.

Pay special attention to any small purchases you don’t remember executing at a location you do not frequent. Whether it’s a single charge or a series of peculiar ones, this can be an indication that someone is testing the card to see if you’re vigilant (and will report the card compromised) before they embark on a significant spending spree.

Another warning sign is any expenditure from a geographical area where you weren’t physically present and didn’t perform an online transaction.

How Does Fraud Occur?

The most effective deterrent against both credit card fraud and identity theft involves ensuring that your sensitive data remains secure to the highest degree possible. Despite your best efforts, however, there is always the chance of a data breach leaving you vulnerable.

According to a February 2021 report from the Consumer Sentinel Network (a collective of state and federal government agencies that track fraud and identity theft complaints), 31% of consumers who left a method of initial contact cited a phone call as these fraudsters’ first choice, closely followed by a text message at 27%.

This suggests that fraudsters are increasingly adept at “phishing”, i.e., seeking personal information using your phone. Below are a couple of examples:

  • Fraudsters may promise a complimentary gift or claim you’ve won a prize, but request your credit card information to handle shipping costs and need your address to acknowledge it.
  • Scammers could claim they’re calling on behalf of a company and need additional information to verify an account that you didn’t actually set up, coaxing you to divulge personal information.

Consumers also reported email as the initial point of contact in 15% of cases, websites or apps in 7% of incidences, social media in 6%, physical mail in 3% of cases, and 1% of fraud incidents originated with an online pop-up or advertisement. Lower down is further information related to phishing scams which can seemingly target anyone over any medium.

The states reporting the highest per capita rates of fraud in 2020 were Nevada, Delaware, Florida, Maryland, and Georgia.

Interestingly, though, there does not appear to be a discernible link between age and being victimized: in 2020, identity theft impacted individuals aged between 30 to 69 almost evenly.

Not all instances of credit card fraud involve outright theft of your physical card. There are many alternates by which thieves can gain access to your credit data, including:

  • Searching through your waste to unearth discarded receipts or copies of card numbers
  • An untrustworthy clerk, server, or retailer logging your credit card data, including the security feature located on the card’s reverse
  • A telecommunication scam akin to the above-mentioned examples

Thieves might also resort to sophisticated methods, encompassing:

  • Skimming — Devices known as “skimmers” that can read your card’s magnetic strip and gleanyour card information. Unscrupulous workers can use such equipment to electronically replicate your card, data that they can then transfer to an unused card or computer for illegal transactions. Skimming devices can also be attached to ATMs or gasoline station counters. Refer to this resource for further advice on skimmers and their signals.
  • Phishing — This term points to deceptive emails, calls, or letters that pose as a firm or institution you may recognize, asking for your card or other personal details. This social manipulation tactic relies on the thief’s hope that you’ll willingly surrender your private information that can then be used to access your credit.

Hackers have discovered techniques to access private data without requiring a physical or digital replica of your data. A technique known as a Distributed Guessing Attack (DGA) enables a hacker to randomize countless expiry dates and CVV numerals until one coincides with an existing card.

Once a hacker procures a 16-digit card digit, they can use unique software to implement multiple arbitrary CVV and expiry date combinations against the card. While there are only 60 potential dates on any valid (non-expired) card and 1000 possible CVVs which may seem a lot, the procedure can be completed in six seconds.

This assault is mainly used on Visa cards, as the company does not capture when across different websites multiple attempts occur. It’s not the case with Mastercard, who will block any hacking attempt on your account after 10 failed attempts, even across different sites.

Who Covers Credit Card Fraud Costs?

The brief answer is — everybody. The FTC estimates that the overall cost of fraud-related activities was $2.2 billion just in 2020.

Since the FTC does not receive data on all fraud incidents, many other sources report a significantly higher cost. According to CNBC, consumers faced losses exceeding $56 billion due to identity theft and fraud in 2020, while card issuers and merchants lost $28.65 billion. By 2027, Nilson Report projects that card issuers and merchants may experience losses nearing $37.50 billion, indicating fraud isn’t disappearing anytime soon!

Even if you’ve never been directly targeted, credit card fraud still impacts you. When a credit card provider has to compensate for fraudulent transactions, it balances the loss by implementing increased charges and interest rate hikes across all consumers.

This means your efforts to build up your credit score may not deliver the low-interest rate you anticipated (although you might still discover some 0% APR offers to leverage).

Who Examines the Fraud?

For most incidents under $2,000, credit card fraud is probed by the issuing bank or card provider, not the police. This is mainly because some police departments don’t deem cases under $2,000 worth probing.

In instances where the money amount surpasses $2,000, local police typically engage and collaborate with the card issuer to pursue the offender. For significantly large cases, the Federal Trade Commission may step in.

Actual Credit Card Fraud Cases and Samples

According to a Pew Research study in 2019, 79% of Americans are “not too or not at all confident that businesses will admit faults and take responsibility if they misuse or compromise personal information,” and 69% state they have a “lack of trust that enterprises will deploy their private information in ways they will be pleased with.”

Breach at Capital One [2019]

Capital One, the fifth-largest card issuer in America, disclosed in July 2019 that a hacker had invaded the personal data of roughly 106 million individuals who had applied for a credit card in the U.S. and Canada between 2005 and early 2019.

The compromised information included personal specifics on consumers and small companies, such as names, some Social Security digits, self-reported earnings, credit ratings, and birth dates.

Capital One confirmed no credit card account numbers or login data were compromised in this breach.

What Occurred After the Breach

Capital One published an FAQ that outlines its response to the breach and how those impacted should react. Essentially, the company said it would directly notify people affected.

While Capital One did offer free credit monitoring and identity protection to those impacted, it also advised customers to keep an eye on their accounts for suspicious activities and immediately report it to the bank.

Breach at Equifax [2017]

In the autumn of 2017, credit reporting bureau Equifax admitted it had fallen victim to a massive breach that put over 143 million Americans’ personal data at risk. Even though the attack commenced in May 2017, it wasn’t discovered until July, and thieves started taking advantage in August.

The New York Post reported that one fraud prevention company experienced a 15% rise in total online fraud attempts, which was probably linked to the stolen data (usually such surges are observed during the holiday season, not late summer).

Similar rises in online fraud activity happened shortly after hacks on Home Depot in 2014 and Target in 2015, but the extent of the Equifax breach indicates consumers could feel the impact for a significantly longer duration.

Equifax blamed the breach on a software flaw which allowed hackers to access Social Security numbers, birth dates, addresses, driver’s license numbers, and credit card numbers of consumers.

What Occurred After the Breach

Following the attack, Equifax offered a free year of credit monitoring service to everyone in the United States with a valid Social Security number. It also started offering a service named “credit lock,” akin to a credit freeze but more readily liftable and renewable as required (we’ll discuss the differences between a credit freeze, credit monitoring, and a fraud alert below).

Hot Tip: Equifax is still offering six additional credit reports due to the breach.Visit this site for more details on how to claim these.

A CreditCards.com survey revealed that 61 million Americans examined their credit scores in the two weeks after Equifax’s announcement, signaling consumers’ readiness to act to mitigate potential damages to their accounts.

Nevertheless, the survey also disclosed that 21% of consumers had never scrutinized their credit scores or reports, despite being aware of the Equifax data violation incident. This evidently signifies that more efforts need to be made to enlighten the public on consistently monitoring their financial data, not just during major fraud occurrences.

TJX Security Breach [2005 to 2007]

Between 2005 and 2007, a security flaw allowed forbidden elements like hackers to steal cardholder information from T.J. Maxx, Marshalls, and other retail stores within the TJX network. Due to the violation spanning multiple years, it is impossible to determine the full scope of the damages. Nevertheless, it is conjectured that over 45 million credit card details were pilfered, resulting in $8 million in unauthorized purchases.

Celebrity Cases of Fraud

Not even celebrities can evade credit card fraud! Here are some fascinating incidents exhibiting that the best support personnel can’t shield everyone from a relentless criminal.

Will Smith

Actor Will Smith, known for films like “Men In Black” and “Independence Day,” once fell prey to identity theft by a man named Carlos Lomax. Lomax managed to acquire 14 credit cards in Smith’s name and accumulated $34,000 in charges. Although eventually apprehended, he managed to damage Will Smith’s credit rating and reputation before doing so. Smith restored his credibility, but Lomax did not.

Bill Gates

A young Bulgarian college student, Alexey K., breached Bill Gates’ personal data and obtained a credit card under his name. The audacious 22-year-old was a recognized member of a global crime syndicate engrossed in producing fake IDs across over 25 countries. Once apprehended, law enforcement authorities managed to put a stop to Alexey’s illegal operations and arrested over 30 people involved in various associated offenses since 2004.

Jennifer Aniston, Anne Hathaway, and Liv Tyler

Jennifer Aniston, Anne Hathaway, and Liv Tyler were all defrauded by a local spa they regularly visited. The proprietor of the Chez Gabriela Spa, Maria Gabriella Parez, conned the actresses out of several thousand dollars. Parez’s spa catered to hair, skin, and other beauty needs of the stars, with basic facials beginning at $300.

Upon detecting a discrepancy in billing on Liv Tyler’s American Express card amounting to $214,000 in erroneous charges by the spa, Tyler’s management company discovered that Aniston and Hathaway had been swindled similarly.

Infamous Cases of Fraud

COVID-19-Related Fraud [2020 to Present]

Regrettably, it comes as no surprise that dishonest individuals capitalized on the global pandemic to swindle unsuspecting persons and governments. Reuters detailed that US losses owing to coronavirus-related fraud had reached an astounding $100 million, predominantly due to identity theft.

Out of the identity theft reports received in 2020, it was reported by the FTC that 406,375 cases came from individuals whose information was improperly used to apply for government documents or benefits like unemployment insurance. This marked a significant rise from 2019, when the figure was just 23,213.

Best Western Hack [2008]

In 2008, the IT security networks of one of the world’s largest and most recognized hotel chains were breached. The cyber intrusion led to a year’s worth of guest information, including home addresses, telephone numbers, and credit card details, being hijacked. The potential damages to hotel guests are estimated to exceed $5 million.

The Largest U.K. Credit Card Fraud in History [Mid-2000s]

In the mid-2000s, an international group of criminals illegally obtained over 32,000 credit card details, produced duplicate cards, and subsequently went on a shopping binge with their ill-gotten gains. They exploited these cards to amass over £17 million ($24.1m) in fraudulent charges over a span of several years.

The scam was executed by Russian and Eastern European criminals operating from London. Their sophisticated scheme entailed the transfer of cash from the U.K. to Poland via Estonia, Russia, the U.S., and the Virgin Islands.

However, these criminals were eventually arrested during a routine anti-terrorism check by transport police. When the officers found 40 mobile phone top-up cards amidst the assessment, it sparked an investigation that resulted in the conviction of 5 men.

Anup Patel’s Credit Card Skimming Scam [2008]

In 2008, Anup Patel, along with an accomplice, pilfered more than 19,000 credit card numbers through gas station credit card terminals. They orchestrated this scam using a specialized hardware piece termed a “skimmer.”

Skimmers are essentially fraudulent credit card terminals that usually replace or attach to an authentic one (see the above example). When a cardholder utilizes the terminal, their card information is transmitted via the skimmer and is subsequently captured. The thief can then reproduce the credit card data, fabricate counterfeit cards, and use them as if they were genuine.

Patel’s scheme was to establish a home-based credit card production unit. Patel and his accomplice also installed hidden cameras to capture confidential information like PINs. The fraudsters managed to steal $3.5 million before their arrest.

Ways To Prevent Credit Card Fraud

Image Credit: Andrey_Popov via Shutterstock

Despite the high prevalence of fraud, various measures can be adopted to safeguard oneself from it. Here are numerous methods to diminish the likelihood of becoming a victim of credit card fraud:

At Home

Employ these general best practices for credit card security, which should be implemented daily to shield oneself from fraudulent activities:

  • Sign every new card as soon as you receive it. By ensuring your signature is on the card, it makes it considerably more difficult for someone to erase or replace your signature and forge theirs if the card goes missing or is stolen.
  • Keep your cards separate from your cash. Most people carry their cards alongside their cash in their wallet, but this implies that if your wallet is stolen, your cards will go with it.
  • Keep the card in view when it’s handed over for payment. This will make you can.
  • Steer clear of signing an empty receipt. Strikethrough any blank space above the total amount (this includes the gratuity amounts) if you don’t plan to approve additional expenses on your card.
  • Invalidate all carbon copies and wrong receipts.
  • Keep all receipts in a secure location.
  • Review your billing statements promptly when they arrive, and verify your card accounts each month just like you would with your bank account.
  • Immediately alert any suspicious actions on your card.
  • Avoid loaning your credit card to others.
  • Make sure to dispose of receipts by shredding them or by cutting them into tiny pieces.
  • Avoid uploading pictures online with your card number visible.
  • Avoid revealing your card number over the phone unless it’s a transaction you initiated and you can trust the company.

Online

Most people now shop online, and it’s crucial to know how you can guard your private details while doing so. Here are some useful tips:

  • Utilize your card solely on websites you have faith in.
  • Avoid clicking on links in emails, specifically those from unknown individuals or companies.
  • Evade entering your card details (or Social Security number, etc.) as a response to an email or via an emailed hyperlink. Always navigate directly to the website of the company instead of inputting the address on your own.
  • Ensure the webpage where you enter card details is secure (i.e., it starts with https:// or displays a lock symbol in your browser bar).
  • Make use of a credit card (not a debit card) to limit your liability for any potential fraud cases.
  • Consider checking whether your card issuer provides a “disposable” or one-time use card number, which remains connected to your account but expires after one use (or is only good for usage at one specific merchant).
  • Avoid disclosing personal details (such as credit card numbers) if you’re using a public computer or public Wi-Fi network.
  • Keep your anti-virus software updated to counteract hacking attempts.
  • Monitor your transaction history — ensure that transactions correspond with the receipt amounts, and look out for strange transactions.

The tips above are straightforward — they can prevent you from having a lot of trouble later on if you protect your information now.

By Telephone

Fraud concerning telephone credit cards is growing, prominent among elderly people… but unauthorized individuals are becoming braver in requesting individuals of all age groups to disclose personal data over the phone.

An effective rule of thumb is if you receive an unexpected call, always inquire who you’re speaking with. Should you not have initiated the call, obtain their details and call them back.

An authentic representative from a reliable company will be able to provide their name, department, and a legitimate number to return their call. Should they be incapable of doing this, take caution, as you may be a target of fraud.

Be cautious of phishing via text messaging, which is increasingly common. Never share or transmit personal information via text, even if you believe you know the recipient.

Plotters can now fake numbers to make it appear as though you’re communicating with someone familiar when it’s actually a criminal on the other end wanting to exploit you.

On Vacation

Credit card fraud risks can escalate when you use your card in unfamiliar settings. When traveling, language and cultural differences create an environment conducive to fraudsters. Awareness of what to watch for, how to stay safe, and what to do if you become a victim is the best form of protection when traveling.

Initially, you should inform your card company about your travel plans or changes in the address. Otherwise, the company may flag a charge made in an unusual location, leading to you losing access to your account.

While traveling, consider using a concealed pouch that you can wear under your clothing. These carriers offer an inexpensive solution for keeping your cards and other valuable items secure, as opposed to carrying a large purse or a handbag.

What To Look Out For

Theft

Professional thieves known as pickpockets can exploit situations where people are in large crowds or confined spaces such as public transit or museums. Use inside or front-facing pockets to securely store your valuables where possible.

These criminals sometimes work in groups with a thief passing the stolen item to numerous accomplices. This effectively means the original thief will not have your stolen items in their possession making it difficult to prove any crime.

Tampered ATMs

Technological advancements have led to credit card skimming technology becoming increasingly advanced and widespread. Be cautious of ill-fitting keypads on ATMs, which may be overlaid on the original keypad to steal your PIN details.

Credit card skimmers can also be fitted into the card slot itself, so ensure it hasn’t been tampered with. Also, be on the lookout for any additional cameras aimed at the ATM from above, as these could capture your PIN number.

If an ATM appears to have been tampered with or altered in any way, treat it as suspicious and find another one. Online ATM locators from Visa and MasterCard can guide you to the nearest ATM, as can mobile applications such as Google Maps.

Interest rate scams

Ever got a call from someone telling you you’ll benefit from significantly lower credit card interest rates by paying an upfront fee first? This scam involves fraudsters pretending to have “special relationships” with credit card companies, which supposedly helps them secure a better rate on your interest payments if you use their service.

In reality, you’re unlikely to get reduced rates, save money, or pay off your debt faster (as these calls typically promise). If you wish to reduce your interest rate, you perfectly have the right to speak to customer service and discuss it directly with your credit card issuer.

If you receive such a call, keep the following advice in mind:

  • Refuse to share private information. Make sure to never provide sensitive data like your social security number, bank account details, card information, or even your complete address over the phone. Scammers having your sensitive details may misuse it for fraudulent purposes.
  • Adopt a skeptical approach. If you receive a call of this nature, question everything. It’s improbable that an unfamiliar cold caller can provide a legit service that saves you money. Hang up if you suspect the person may not be genuine.
  • Stop unsolicited calls. Your number can be added to the National Do Not Call Registry. This implies that a telemarketer is allowed to call you only if you have agreed to accept calls from their company, if you’ve requested information from the company in the preceding three months, or made a purchase from them within the last 18 months.
  • Report any breach. If you’re registered, but still receive a call, you’re entitled to report them. This helps ensure you don’t receive further calls from the same organization.

the future.

  • Submit a complaint. If you suspect that you might have fallen victim to this kind of credit card fraud, you should file a report with the Federal Trade Commission. They will endeavor to help restore your funds, and hold the fraudsters accountable.
  • Regardless of how attractive the offer appears, it’s always advised to keep away from unsolicited callers promising you deals that appear too good to be genuine.

    How do I determine if a website is safe?

    Being informed often pays off. Even though most e-commerce platforms handling financial transactions do their utmost to secure credit card information, ensuring their efforts are consistently sufficient cannot be guaranteed.

    To safeguard your card details, you should try to familiarize yourself with the danger signs to be on the lookout for. Even though some of the more complex elements of website creation might be beyond your understanding, there are basic alert signals that anyone can quickly notice:

    • Inadequate website upkeep. A website that visibly hasn’t been updated in a long time, might be operating outdated versions of WordPress, Magento, and other CMS platforms. Lack of updates could mean missing security patches that prevent websites from being infected with malware. You can use instruments like Sucuri’s site checker to determine if a page has been properly managed.
    • Antivirus software. It’s always a good idea to use an antivirus program while browsing online. Should anything questionable be detected on a website, they will alert the user. While the antivirus usually entails a yearly fee, the protection it offers to safeguard your financial information is worth it.
    • Blacklist databases. Google maintains a comprehensive catalog of sites that they believe pose a danger. If a site you intend to use is included in this list, you will be greeted by a caution page stating it doesn’t adhere to Google’s security standards. Even though you are normally offered the option to proceed, it’s strongly recommended not to.
    • Strange Javascript. Should you wish to be more technical, you can check the Javascript (the most basic code) of a site. ScriptSafe is a useful tool that will let you view this information when using Chrome. Even though it could be challenging to understand what to look out for, you could also paste a URL into a tool provided by VirusTotal to see if they’ve identified the site for any uncertain activities.

    At the end of the day, caution is always the best policy if a website appears untrustworthy. Never disclose card details to any site you do not consider entirely safe.

    Safety Tips

    Pre-planning can reduce the need for impulsive decisions while on vacation. You can pre-arranged accommodations, transportation, tours, and rental cars from your home, minimizing the necessity for on-the-spot transactions.

    Researching meal costs and taxi fares online can help you set daily cash allowances, reducing the need to use your card for these expenses. Storing excess cash and cards in your hotel room safe can also help you avoid carrying large amounts. As a basic guideline, use cards for significant purchases and cash for smaller items.

    Essential Point: Stay aware of your purchasing habits and the physical location of your card, regardless of your location or where you’re spending money, is the most effective method to safeguard yourself from fraud attempts. Therefore, keep a vigilant eye on those financial statements, credit reports, and online transaction records!

    What Actions to Take If You’re a Victim of Credit Card Fraud

    Upset man holding credit cardImage Credit: Drobot Dean via Adobe Stock

    How To File a Report on Credit Card Fraud

    If you believe you’ve been a victim of credit card fraud, it’s crucial to take immediate action. Most credit card providers provide a toll-free number for you to call, which can also be found on your statement and within your online account.

    Some credit card providers, such as the Chase Sapphire Preferred® Card or Chase Sapphire Reserve®, provide round-the-clock assistance for fraud. Chase has a streamlined process that allows you to report fraud via phone, document it, reverse the charges, and then obtain a new card.

    Other banks, like American Express, Citi, Bank of America, TD Bank, and HSBC, have similar procedures in place. It’s worth noting that premium cards with higher annual fees (like The Platinum Card® from American Express or American Express® Gold Card) will provide you with the highest level of protection against fraud.

    Most banks also advise you to contact the three primary credit bureaus to place a fraud alert on your account. This sends out a general request for all creditors to contact you before opening any new accounts in your name.

    Holds, Freezes, and Monitoring Your Credit — What’s the Difference?

    There are other potent actions that you can take on your credit reports apart from fraud alerts, in case you have been a victim of fraud or identity theft. Here’s how they function.

    Credit Freeze

    A fraud alert, as previously discussed, is a free and temporary measure designed to notify creditors to perform extra identity verifications before issuing any new lines of credit. In contrast, a credit freeze is a much stronger safeguard.

    Upon placing a freeze on your account with all three credit reporting agencies (Equifax, Experian, and TransUnion), no one can open new accounts under your name until the freeze is lifted (also by you).

    Credit freezes are free under federal law and can be activated within 24 hours if requested online or by phone. By mail, this process is a bit longer.

    While a freeze can be lifted or applied at any time (temporarily or permanently), this protocol is usually best for individuals who don’t frequently establish new lines of credit. During the process, you’ll receive a PIN that you can use to freeze or unfreeze your accounts via phone or online. A request to lift a freeze must be implemented within one hour of receipt.

    Credit Lock

    A credit lock, similar to a freeze, prevents new accounts from being opened in your name while it’s active. Also, ensure that the lock is applied with all three reporting agencies.

    You won’t use a PIN to lock/unlock your account, and the procedure is typically faster than with a freeze. A lock can be activated or deactivated using a computer or mobile app, but not over the phone.

    There’s a fee associated with a credit lock that changes depending on the reporting agency and may also fluctuate over time. If you select this service, make sure to read the agreement closely. Some agencies charge a monthly fee that can rise, rendering a credit lock potentially more costly than a freeze.

    Credit Monitoring Services

    While credit locks and freezes block access to your accounts, credit monitoring services simply help you monitor their activity.

    You can pay for

    Credit supervision that ranges from $10 to $30 per month is available. These paid services frequently scour the internet to verify if your data is being utilized unlawfully, and may provide extensive insurance against any fraudulent losses that occur under their care.

    A variety of businesses also provide complimentary credit supervision capable of notifying you automatically of any modifications to your credit report (Credit Karma and Credit Sesame were mentioned previously).

    Unless an individual has fallen victim to identity theft, many customers find out that free credit supervision in combination with keeping track of their credit reports provide a satisfactory feeling of security.

    Strategic choices about when investing in credit supervision might be beneficial can also be made. For instance, monitoring may be helpful in ensuring your credit score is at its highest (for obtaining an attractive mortgage rate) if you plan to purchase a house within the next year.

    You can individually keep track of your credit history as well by contacting the credit bureaus directly to request your credit report and score. Don’t forget you’re eligible for a minimum of one free report each year from every agency; you could even stagger these to keep track of your credit every four months or thereabouts.

    • Equifax — 888-548-7878
    • Experian — 888-397-3742
    • TransUnion — 800-916-8800

    Steps To Take When Things Falter

    Your personal safety is a top priority in any instance dealing with fraud. Avoid confronting any fraudsters or thieves personally, regardless of whether you think you recognize them or their location. They could be armed or have accomplices nearby without your knowledge.

    Remember, it’s crucial to inform your card issuer about any fraud, theft, or loss of your card and/or identity details as the first step. Reporting early is often beneficial.

    We advise maintaining a separate note with the emergency hotline contact details of your card issuer, particularly if you’ll be traveling.

    Separate this information from your actual card (e.g., don’t keep it in your wallet, purse, or another place that could be easily stolen). Once you make the call, your card issuer will guide you through any subsequent steps.

    Consider getting a backup card as well. This might be another credit card or a prepaid debit card loaded with a specific amount of money (that’s NOT linked to your bank account!).

    Always, especially during travel, carry and store these cards separately from your main card.

    What Occurs After Reporting a Stolen Card?

    According to law, once the card is reported stolen, you will no longer be held liable, irrespective of the number or total amount of unauthorized charges. As per the Fair Credit Billing Act (FCBA), your maximum liability, even prior to reporting fraud, is $50 per card.

    If you suspect unauthorized use of your credit card, immediately report any fraud (through an app, website, or phone call) to your credit card company or bank. It may also be beneficial to follow up with a letter.

    The card issuer might contact you for more information or to sign an affidavit under oath stating that the disputed transactions weren’t made by you.

    It’s also possible to file a lawsuit against the person who infringed your identity or credit card information. Normally, this is done in small claims court unless the amount exceeds your state’s small claims limit.

    Prior to filing a lawsuit, it’s advisable to seek legal advice to understand your entitlements and rights under the law and the likely compensatory damages. Most often, if the accused person is apprehended, he or she also faces criminal charges.

    Do not mistake credit card fraud for mistaken or wrong charges. For instance, if a transaction you approved gets processed twice accidentally by the merchant, this wouldn’t be classified as fraud. But you would want to dispute the extra charges for items you didn’t receive or in cases of double billing.

    In such scenarios, under the Fair Credit Billing Act, you ought to dispute the charges within 60 days. This is achieved by writing a letter to the card issuer to inform them about the incorrect charges on your account.

    A free PDF document from the FTC is available for download here providing further details.

    Concluding Thoughts

    If you utilize credit cards to earn points and miles, it’s important to be aware of common types of credit card fraud you may encounter. This guide includes many useful tips and strategies for best usage practices to prevent credit card fraud.

    Being prepared in case of fraud is also beneficial. This includes quickly reporting the fraud to the credit card company to limit your liability, knowing the necessary tools to safeguard your credit score, and having a solid plan B in case you’re travelling.

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    Credit Basics - The Best Ways to Prevent Credit Card Fraud

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