The holiday season is the perfect time of the year to buy presents for your friends and family, but it’s also a time when credit card fraud is at an all-time high. In fact, studies have shown roughly 25% of people fall victim to credit card fraud during the holidays.
Because of how common credit card fraud is during the holiday season, it’s important to understand what holiday credit card fraud is, how it can happen, and how to help protect yourself.
What Is Holiday Credit Card Fraud?
As the name implies, holiday credit card fraud is when you become a victim of credit card fraud during the holiday season. Credit card fraud, in general, is when someone masquerading behind another’s identity makes purchases using their credit card information.
They can do this using your physical card or stealing your credit card number and PIN.
Regardless of how or when it happens, credit card fraud is a form of identity theft because someone uses your personal and financial information to buy things without your permission.
As such, it’s a serious crime that is getting easier and easier to fall victim to.
Types of Credit Card Fraud
Another factor that makes holiday credit card fraud so common is that there are multiple ways it can happen. Of those many ways, they can get thrown into two categories:
Card Present Fraud
Card present fraud refers to when someone steals or finds your physical credit card and uses it to make purchases.
Card Not Present Fraud
Card not present fraud refers to when someone steals your credit card information and uses it to make purchases. This type of fraud is most common with online shopping, phone transactions, or text and email scams.
Common Methods Used by Fraudsters
With phishing scams, fraudsters generate scam emails, text messages, or phone calls designed to trick you into revealing your credit card information. They have many ways of getting a hold of your phone number and email address, and once they have it, they can send you deceptive messages at will.
Charity and Investment Scams
Scammers understand that the holiday season is a time when people are feeling more generous and looser with their money than usual. As such, they set up fake charities requesting donations. Common reasons for needing money include medical or legal bills or funding for an investment opportunity.
Fraudsters can also use a skimming device to steal credit card information. The “skimmer” gets installed illegally on ATM machines, gas station pumps, and credit card scanners. When you insert or swipe your credit card to pay for something, the card information is recorded by the skimmer which gives its user access to your credit card.
Online Shopping Fraud
Of all the potential scams during the holiday season, online shopping fraud is perhaps the most rampant. This type of fraud happens when you make purchases online and someone steals your credit card information.
In most cases, this happens from making purchases on fake websites or online stores.
Another way that fraudsters steal funds is through romance scams. Romance scams are where people on dating or social websites become involved with you and strike up a relationship during the holiday season.
Upon befriending you, the person may then ask for money and either guilt or provoke you into giving it to them.
To highlight just how serious these types of scams are, consider a recent report from the Federal Trade Commission. According to its findings, romance scams consistently report upwards of $100,000 in losses, with the average person losing $4,400.
These numbers make romance scams one of the most lucrative forms of fraud around. Because many people give money using their credit cards, romance scams are a form of credit card fraud.
Impact of Holiday Credit Card Fraud
Being the victim of identity theft and credit card fraud during the holiday season is no laughing matter. According to a study by the advisory firm Javelin, consumers lost $43 billion to identity fraud last year. Of that $43 billion, the Federal Trade Commission reported that just under $9 billion was directly related to credit card fraud.
Credit card fraud is never convenient, but it’s especially troubling during the holiday season. In addition to losing money that could be spent on vacations, presents, and other activities, credit card fraud cases are difficult to address during Christmas because banks and the major credit bureaus — TransUnion®, Experian®, and Equifax® — are often closed.
As such, holiday credit card fraud can quickly suck the joy and spirit out of the holiday season.
Tips to Help Prevent Holiday Credit Card Fraud
Even the most vigilant among us can fall victim to a scam resulting in credit card fraud. Therefore, it’s essential to be extra cautious during the holiday shopping season.
Here are five great tips to help you prevent credit card fraud this holiday season.
Protect Physical Credit Cards
The first step to help you avoid credit card fraud this holiday season is to protect your physical credit cards. To do this, keep your credit or debit card tucked away securely in your wallet or purse.
It’s also important to keep it in a secure location when you aren’t using it, such as in an RFID-blocking sleeve or wallet. This helps prevent digital theft by blocking the RFID signal a card can emit.
Shop Safely Online
In addition to protecting your physical credit cards, it’s equally as important to protect yourself while making online purchases.
Here are a few tips and tricks to help you protect your hard-earned money.
- Only shop on secure and credible websites containing an “https” URL.
- Avoid using easily cracked passwords if you need to set up an online account. To do this, implement varied capitalization use, numbers, and symbols to create your own unique password with every account.
- Enable two-factor verification.
- Never use public Wi-Fi networks to make transactions or check your credit information.
- Use virtual credit cards and accounts, such as Apple Pay, PayPal, or Venmo.
The good news about credit card fraud is that it’s avoidable when you take the right precautions. To do this, you should set up account alerts that watch out for fraudulent activity. You should also watch out for unauthorized charges or changes to your accounts and alert the Identity Theft Resource Center if necessary.
Additionally, use IdentityIQ identity theft protection services to help protect you from credit card fraud and other forms of identity theft.
Be Cautious of Phishing
As we previously mentioned, phishing scams are extremely common during the holiday season. Phishing scams typically manifest as an email or text message where the scammer encourages you to click a link contained within the text.
When you do this, a virus downloads onto your device and allows access to your financial institution or credit accounts. Therefore, you should never click links in an email or text message without first verifying the sender’s identity.
While credit card fraud is very common, credit cards are actually more secure than most debit cards. Therefore, it’s a good idea to travel with credit cards rather than a debit card since it offers more security and fraud protection.
Despite your best efforts, it’s still possible to be the victim of credit card fraud. If this happens, you should notify your credit card company or card issuer immediately. You should also initiate a credit freeze to lock down your credit card accounts.
In addition to knowing what to do if credit card fraud has already occurred, it’s important to do everything you can to help protect yourself from it in the first place.
Use IdentityIQ identity theft protection for an additional layer of protection. IdentityIQ notifies you in real-time of possible suspicious activity, unauthorized purchases, and changes to your account.