At a Glance
Most credit cards have low or zero liabilities, meaning if you are a victim of credit card fraud but report it within 60 days, you will have little or no financial burden. This seriously protects your finances, but it doesn’t necessarily prevent the headache and burden of having to discover and report the theft, get a replacement card, reset all auto pay accounts, and other necessary steps.
Protect yourself against credit card fraud and know what to do if your information is stolen:
In this article, you’ll learn:
Types of credit card fraud
There are a variety of types of scams used to get your card information for fraudulent purposes, and the three most common include:
- Card theft: The oldest form of theft in the book, is when someone actually takes your physical credit card. This could be from your wallet or purse, from a restaurant table, or a new card from your mailbox. If your card goes missing or you are expecting a new card that never arrived, contact your issuer immediately. They can place a hold on your card so it can not be used for transactions.
- Cloned cards: This happens using devices called “skimmers” that fit over card readers and allow thieves to steal your card number when you swipe. They can then duplicate those numbers and use them for online purchases and transactions. EMV chip-enabled cards have made this process much more difficult, but not impossible.
- Account takeover: This happens if a criminal contacts your card issuer and uses your personal information to get control of your account, such as changing passwords and access to PINs. If you don’t use your account often, it can take a while to notice this, though some companies enable a type of verbal password to try to prevent this type of fraud. However, by the time you notice, you are often locked out of your account.
How can you prevent credit card fraud?
There’s no 100% guarantee that you can completely prevent credit card fraud, but there are several relatively easy actions you can take to lower your fraud risk.
1. Review your credit reports regularly
Every 12 months, you can request a free credit report from each of the three major credit bureaus (Experian, Equifax, and TransUnion). In fact, through the end of 2023, you can also get free weekly online credit reports, though you probably don’t need to check them more than once every few months.
When you get your report, make sure all of the data is accurate. Not only can errors negatively affect your credit score, it can also be an indication of fraud. Specifically, make sure there are no new accounts that you didn’t open.
2. Set up fraud alerts
Ask your card issuer to set up a fraud alert on your card, so if a thief tries to open an account in your name or there are large/suspicious transactions, the issuer will typically call you to verify your identity and confirm you’re the one making the transactions. You can also get alerts via email and text messages.
Then, if you lose your credit card or you believe your information has been stolen, immediately report it to your credit card issuer and request they freeze your account. You can also usually do this quickly online or through the card’s mobile app, and when this happens, creditors can’t even access your credit report so it’s impossible for them to approve a credit application.
3. Set a payment limit
All credit card issuers allow you to set payment limits for transactions and payments. By default, the limit is set to your credit limit (the maximum amount available on the card). However, it’s a good idea to change these settings to the minimum amount you need for day-to-day spending and transactions.
If you need to change the limit, you can do so easily and anytime from the card’s mobile app or your online profile.
4. Watch out for phishing
Phishing is a term used to describe the fraudulent practice of sending emails, texts, phone calls, or even mail pretending to be a reputable company in order to get you to reveal personal information like credit card numbers or other financial information.
For example, you may receive an email from your “bank” or “credit card issuer” to warn you that your credit numbers have been compromised. They may then ask you to confirm your credit card number or provide other financial information they can use for fraud.
Today’s scams can be pretty sophisticated and sometimes difficult to identify, as they may even use familiar logos and company names. However, if someone is asking for your credit card information in one of these ways, it’s likely fake.
5. Don’t use unsecure websites
If you look at the address bar at the top of your browser and see a little padlock on the left side, that means the site is secure. The web address will also begin with “https.” No padlock and/or no “https” likely means the site is not secure. Never enter your credit card information on a website that isn’t secure.
6. Don’t save credit card information online
This can be difficult to follow because saving your card information makes online transactions so convenient. However, even with retailers or institutions you trust, there’s always a risk of a data breach. While more of a hassle, typing in your card information each time you have a transaction is an easy way to lower your risk.
7. Identify ‘skimmers’
Skimmers are devices used by fraudsters to steal your credit card information. They are often hidden on ATMs and fuel pumps, and they “skim” the data from the magnetic strip on the back of your card. Once they get the information, they will use it to make fraudulent transactions that don’t require a physical card, such as online.
Skimming can also happen when you give your credit card to anyone, even a restaurant waiter or cashier at a retail store. That’s why it’s important to consistently monitor your credit card statements and set up alerts for when your card is used so you can catch fraudulent transactions quickly.
8. Avoid oversharing on social media
While oversharing on social media is typically unintentional, criminals can comb through your profiles and gather information about things like where you live, birthdays, work places, financial data, and more. They can go back through years worth of posts on all of your media profiles and even go to profiles of friends and family members to gather more information.
Simply be cautious and think twice about what you post. For example, if you post photos of your dog and its name, don’t use your pet’s name as a password.
9. Use mobile payment apps
Using payment apps such as Apple Pay, Android Pay or Google Pay can help decrease the risk of credit card fraud. That’s because these apps use special technology that allows you to pay without exposing your actual credit card account number.
In this case, even if a criminal is able to access your transaction information, your actual account number is not included and remains safe.
If you use these apps, make sure you password-protect your phone so your screen stays locked if the phone is lost or stolen.
10. Avoid using public Wi-Fi for financial transactions
Public Wi-Fi is very susceptible to hackers because they are typically unencrypted. A fraudster can be waiting in a public area waiting to catch someone disclosing their credit card number or bank account information online so they can easily steal your information.
If you must make a financial transaction, wait until you’re on a secure network. Or, use a virtual private network (VPN) to keep your information protected.
11. Use different cards for autopay and everyday spending
If you use autopay to pay for things like your rent, utilities, phone bill, website subscriptions, or similar items, it’s a good idea to set up one credit card for all of them and then don’t use the card for anything else. That way, if you were to be a victim of credit card fraud, you won’t have to worry about your bills not getting paid.
Then, have a separate card to use for everything else. This won’t necessarily prevent credit card fraud, but it can ensure that if one card is breached, you won’t have to change all of your accounts and potentially have late payments.
12. Don’t share credit card information over the phone
If a “business” calls you directly, it’s fair to be suspicious. Criminals can do a lot to seem legit, even changing the Caller ID to show the real business name. They may tell you there’s a problem with your account (such as a billing issue) and then ask for your credit card information.
It’s very unlikely a real company will do this, so if anyone is asking for your information over the phone, hang up and call the customer service number on the back of your card, call the business directly, or go to their website to ask if there are any issues.
What should you do if you suspect credit card fraud?
Whether your card was physically stolen or you believe your card numbers or account has been compromised, here are a few things you can do. Remember, the faster you detect and report fraud, the faster it can get resolved and the less damage it will do:
1. Contact your card issuer
The first thing you should do if you suspect credit card fraud is immediately contact your credit card issuer. You can do this by calling the customer service number on the back of your card, or often can do so through their website or mobile app.
Once reported, the issuer will likely cancel that card and send you a new one with different numbers.
2. Place a credit freeze on your credit report
Next, contact each of the three credit bureaus and place a freeze on your credit report. This means if someone tries to open a credit account in your name, the bureaus won’t be able to access your credit report so their request will be denied.
You should also place a fraud alert on your report, which requires potential new lenders or issuers to verify your identity before issuing any new accounts. You can cancel this alert at any time.
3. File a fraud report with law enforcement
If you’re sure you’re a victim of fraud, consider reporting the crime to law enforcement, including:
- Local law enforcement
- The Federal Trade Commission then shares this information with any law enforcement agencies investigating.
This isn’t necessarily a necessary step, but it can help you recover anything that was stolen or purchased with your card.
4. Contact the credit bureaus
Finally, you’ll want to let the credit bureaus know so that they can help you fix any damage done to your credit report and score.
Credit card fraud vs. identity theft
Credit card fraud and identity theft are similar, but not exactly the same. In fact, credit card fraud is a type of identity theft.
Identity theft is much broader because someone who steals your identity may use your personal information (such as Social Security number or bank information) to do things like:
- Open a bank account
- Open a credit card account
- Take out a loan
- File taxes
On the other hand, credit card fraud is when your account is used for unauthorized purchases. For example, you may see purchases you didn’t make listed on your statement or an account you didn’t open listed on your credit report.
Related: What is Financial Identity Theft?
Credit card fraud can be triggered in a number of ways, such as lost or stolen cards, credit card skimming, hacking your computer or online accounts, phishing attempts, stealing your mail, and even looking over your shoulder if you use your card at checkout. This depends on whether the cardholder uses prevention methods and pays attention to their statements and credit reports. However, some estimates say less than 1% of credit card fraud is actually caught. Charges you didn’t make or accounts you didn’t open on your statements or credit reports are the best ways to know if your card is compromised.
Credit card fraud can be triggered in a number of ways, such as lost or stolen cards, credit card skimming, hacking your computer or online accounts, phishing attempts, stealing your mail, and even looking over your shoulder if you use your card at checkout.
This depends on whether the cardholder uses prevention methods and pays attention to their statements and credit reports. However, some estimates say less than 1% of credit card fraud is actually caught.
Charges you didn’t make or accounts you didn’t open on your statements or credit reports are the best ways to know if your card is compromised.