How to identify fraudulent charges on your credit card
Quick insights
- Regularly reviewing your credit card statements and transaction alerts may help you spot unusual activity.
- Small test transactions or purchases from unknown merchants can be signs of fraudulent charges.
- If you identify fraudulent charges, contact your card issuer immediately and check your credit report.
Your credit card can be a powerful financial tool, but it can also be a target for those looking to make unauthorized purchases. Understanding what a fraudulent charge is and ways to spot one may help save you significant stress and financial loss.
In this article, we’ll discuss some signs of fraudulent charges, common types of fraud and options when you spot an unauthorized charge.
Signs of fraudulent charges
Spotting fraudulent charges often comes down to noticing discrepancies in your regular spending patterns or unexpected activity on your account. These charges may range from small, seemingly insignificant transactions to larger purchases you know you didn't make.
Sometimes, fraudsters will make very small purchases to test if a stolen card number is active before attempting larger transactions. These test charges might be for a dollar or two and can easily be overlooked if you are not carefully reviewing your statement.
Other signs of unusual charges and account activity include:
- Unfamiliar transactions: Purchases from stores or services you do not recognize may be a sign of fraudulent activity. Even if the amount is small, any charge that doesn't ring a bell may warrant further investigation.
- Unexpected cards or mail: Receiving a new credit card in the mail that you did not apply for, or noticing that expected statements or cards are missing, may signal that someone has opened an account in your name or intercepted your mail.
- Account alerts: Many financial institutions offer text or email alerts for transactions over a certain amount or changes to your online account. Getting alerts may help you identify fraudulent charges.
How to review your statements for fraudulent activity
Regularly reviewing your credit card statements can support your efforts to identify unauthorized use. This proactive approach may help you catch unusual activity early. You may want to make it a habit to check your account regularly. This might be monthly (when your statement arrives) or even more frequently through online banking portals.
You may also be able to use your credit card company's online banking platform or mobile app to view your transaction history. Many apps allow you to set up alerts for purchases, which can help you detect unusual activity. For example, you can set up alerts for transactions over a certain amount or at different types of merchants. This may help you detect purchases that are out of the ordinary for your spending habits.
Your credit report may also provide valuable insights. You can request a free annual credit report from each of the three major credit bureaus. Accounts opened in your name on your report that you did not apply for could indicate identity theft.
What to do if you spot a fraudulent charge
Discovering an unrecognized charge on your credit card can be unsettling, but taking quick action can help mitigate the financial impact of unauthorized charges. Most credit card companies have processes in place, and your liability is typically limited when you report unauthorized purchases quickly.
When you spot a fraudulent charge, some courses of action include:
- Contacting your card issuer: As soon as you identify unauthorized charges, call the customer service number on the back of your card or log into your account to report the activity.
- Placing a fraud alert: Placing a fraud alert with the three major credit bureaus is designed to notify lenders to take extra steps to verify your identity before extending new credit, potentially helping to prevent further identity theft.
- Monitoring your credit report: After reporting the unusual activity, it can be helpful to continue monitoring your credit reports closely for several months.
Common types of credit card fraud
Understanding the various methods criminals use to commit credit card fraud may help you to better protect your accounts. Scammers are constantly evolving their tactics, but some common types of fraud include:
- Card-not-present (CNP) fraud: This occurs when criminals use your credit card number to make purchases online or over the phone without needing the physical card. This type of fraud is common after data breaches or phishing scams expose card details.
- Skimming: This type of fraud involves devices secretly installed on card readers at point-of-sale (POS) terminals that record your card information when you swipe or insert it.
- Account takeovers: In an account takeover, a fraudster gains access to your credit card account, often by stealing your login credentials through phishing or malware, or by tricking you to provide them. They may then be able to change your contact information, make purchases or apply for new cards in your name.
- Phishing scams: These scams involve deceptive emails, texts or phone calls that trick you into revealing your credit card details or personal information. The messages often impersonate legitimate organizations like your bank or a well-known retailer.
Preventing fraudulent activity
Preventing unusual activity on your credit card account often involves a combination of careful habits and available card security features. A few strategies designed to help prevent fraud include the following:
- Checking for indicators of a secure website, such as "https://" in the URL and a padlock icon in your browser's address bar, when shopping online.
- Avoiding making purchases or checking your account on public Wi-Fi networks, which can be less secure than a private network.
- Using strong, unique passwords for all your online accounts and enabling multi-factor authentication when available for an additional layer of security.
- Shredding documents containing personal or financial information before discarding them (dumpster diving remains a tactic for identity thieves).
While no method guarantees absolute protection, adopting these practices may help reduce your risk of becoming a victim of credit card fraud.
In summary
Protecting yourself from unusual credit card activity generally includes vigilance and proactive measures. Regularly reviewing your statements and setting up transaction alerts can help you identify fraudulent charges. Should you spot unfamiliar account activity, contacting your card issuer quickly may help prevent further fraud from occurring.
