What to know about credit card fraud and ways to detect it
Quick insights
- Credit card fraud is the unauthorized use of your card information for purchases or withdrawals.
- Securing your physical cards, monitoring online accounts and checking your credit report are some ways to help protect you against credit card fraud.
- Prompt action after discovering unusual activity may help limit further damage when fraud occurs.
Checking your credit card statement only to find charges you didn't make can be alarming. This unsettling scenario is the reality of credit card fraud, a pervasive issue that has the potential to impact anyone.
In an increasingly digital world, credit card fraud can happen in a variety of ways—whether someone has your physical card or not. This article will guide you through ways to recognize and respond to unauthorized use of your credit card.
What is credit card fraud?
Credit card fraud occurs when someone uses your credit card or its information without your permission to make purchases or withdraw funds. This unauthorized activity can range from small charges to significant financial losses.
The consequences of credit card fraud may extend beyond immediate financial loss, too. It can lead to identity theft, damage to your credit score and stress as you work to resolve the issues.
Common types of credit card fraud
Fraudsters are constantly evolving their tactics, but some common types of credit card fraud include:
- Physical card theft: This occurs when your actual credit card is stolen from you. The thief may be able to use your card for fraudulent purchases until you report it missing.
- Card-not-present (CNP) fraud: This type of fraud happens when your card details are used for online, phone or mail-order purchases without the physical card being present.
- Skimming: Skimmers are illegal devices attached to legitimate card readers at places like gas pumps, ATMs or point-of-sale (POS) terminals. These devices discreetly capture your card's magnetic stripe data when you swipe it, allowing fraudsters to create duplicate cards.
- Phishing and smishing: These are deceptive communication attempts, usually via email (phishing) or text message (smishing), designed to trick you into revealing sensitive information.
- Account takeover: In this scenario, a fraudster gains unauthorized access to your existing credit card account. They might change your contact information, request new cards or make purchases, effectively taking control of your account.
- Application fraud: This involves fraudsters using your stolen personal information, such as your name, address and Social Security number, to open new credit card accounts in your name.
- Data breach: In a data breach, sensitive information—including credit card numbers and personal details—is accessed or disclosed without authorization, allowing fraudsters to illegally obtain your information.
Spotting unusual activity on your credit card
Regularly monitoring your accounts and being aware of unusual patterns may help you detect unauthorized activity quickly. Here are some indicators that might suggest unauthorized use of your credit card:
- Unrecognized charges on your account or statement
- Changes to your personal information like your billing address, phone number or email
- Unexpected new accounts that have been opened in your name
- Missing statements or routine mail from your card issuer
- Declined legitimate transactions
Protecting yourself from credit card fraud
By adopting responsible habits and using available card security features, you may be able to help reduce your risk of becoming a victim of credit card fraud. Some ways to help safeguard your credit cards and personal data include:
- Practicing secure online shopping: When entering payment information on a website, you can check for an encrypted connection by noting whether the URL begins with “https” and includes a padlock icon in the address bar.
- Creating strong passwords: Brainstorming unique, complex passwords for your accounts and using a password manager to keep track of them may help keep sensitive information safer. Enabling two-factor authentication whenever possible also adds another layer of security.
- Enabling transaction alerts: Text or email alerts from your credit card issuer can notify you of transactions made with your card and alert you of unusual activity.
- Using card security features: Modern credit card security features such as EMV chips and virtual credit cards are designed to help keep your information secure.
You may also want to regularly review your credit report for unfamiliar accounts or activity. And when discarding sensitive documents such as mail, receipts or card offers, shredding them may help keep personal information private.
Steps to take if you are a victim of credit card fraud
Discovering unusual activity on your credit card can be unsettling, but prompt action may help limit potential damage. If you suspect or confirm credit card fraud, consider the following actions:
- Contacting your card issuer immediately: Reaching out to your credit card company as soon as you notice unauthorized activity may allow them to freeze or cancel the card and guide you through the reporting process.
- Documenting everything: Keeping a detailed record of all communications, including dates, times and reference numbers, can support your claims and help with any follow-up communications.
- Filing a police report: Filing a police report, especially if your physical card was stolen or losses are substantial, may provide additional evidence for your card issuer.
- Notifying credit bureaus: If your credit card or information is stolen, you can place a fraud alert on your credit report with the three major credit bureaus. You can also consider a credit freeze to help prevent new accounts from being opened.
- Changing passwords: If your online accounts are compromised, updating passwords for any associated accounts may help prevent further fraud from occurring.
Understanding credit card fraud protections
Many credit cards come with built-in fraud protection tools. One example is a "zero liability" policy, which means you may not be held responsible for unauthorized charges when you report it.
If your card information is stolen—for example, through a data breach or card skimming—you may not be responsible for any fraudulent charges when you report them. Fraud protections vary by card, so check your cardmember agreement to determine what protections it offers.
In summary
Credit card fraud can be a serious headache, but understanding its forms and ways to protect yourself can help you navigate this issue. Monitoring your accounts for unusual activity and knowing steps to take if you become a victim may help you safeguard your financial well-being.
Your credit card issuer may provide fraud protection tools to limit consequences after the fact, but steps like routinely reviewing your transactions and promptly reporting unusual activity are designed to help you defend against unauthorized use of your credit card information.
