What Is Credit Card Fraud?

Credit card fraud is the unauthorized use of a credit card account for the purpose of stealing goods or money. This pervasive crime affects hundreds of thousands of Americans each year. Understanding how it works can help you defend yourself against it.

How Does Credit Card Fraud Happen?

Credit card fraud can occur through various criminal tactics. Here are some common methods:

• Card theft: Physical theft of a credit card, which can be used at ATMs or for purchases.
• Skimmed card information: Use of a “skimmer” to capture card information during legitimate transactions.
• Cloned cards: Creating a fake card using stolen information from the card’s magnetic stripe or chip.
• Bogus “card not present” transactions: Using stolen card information for online or phone orders.
• Data breaches: Hackers steal personal information during data breaches, which can be used to set up bogus accounts or hack existing ones.
• Phishing: Tricking victims into giving up personal information through fake messages from trusted sources.

How to Identify Credit Card Fraud

Detecting credit card fraud early is crucial. Here are some ways to identify it:

• Check Credit Card Statements Regularly: Examine transaction histories for suspicious activity.
• Keep Tabs on Your Credit Reports: Regularly check your credit reports from Experian, TransUnion, and Equifax.
• Don’t Ignore Debt Collectors: Unfamiliar bills could indicate fraudulent accounts.

How Does Zero Liability Protection Work?

Zero liability protection shields you from financial responsibility for fraudulent charges, provided you report the theft or unauthorized charges promptly. This feature is essential when comparing credit cards.

What to Do if You’re a Victim of Credit Card Fraud

If you suspect you’ve become a victim of credit card fraud, take these steps immediately:

• Notify your lender: Report suspicious transactions or stolen cards to your card issuer.
• Lock your accounts: Use the card lock feature to block new transactions.
• Lock your credit reports: Place a fraud alert, security freeze, or credit lock on your credit reports.
• Set up credit monitoring: Credit monitoring services alert you to new information on your credit reports.
• Notify appropriate law enforcement: Report the fraud to the FTC’s IdentityTheft.gov website.
• Notify the credit bureaus: Dispute inaccurate credit report information and have fraudulent entries removed.

How to Avoid Credit Card Fraud

Adopt these habits to avoid becoming a victim of credit card fraud:

• Safeguard your cards: Keep your cards secure and avoid lending them out.
• Use contactless payments: These are more secure and less susceptible to skimming.
• Guard your PIN: Conceal the keypad when entering your PIN.
• Don’t store card numbers online: Avoid saving card info for future use at online checkouts.
• Report and replace missing cards immediately: Request a replacement card if yours goes missing.

The Bottom Line

Credit card fraud is a side effect of the convenience of credit cards. By keeping a close watch on your cards, account statements, and credit reports, you can detect and prevent fraud quickly. For an extra measure of vigilance, consider enrolling in free credit monitoring services.