If you own a credit or debit card, there’s a pretty good chance you have experienced credit card fraud at some point in your life. According to research conducted by Security.org, roughly 65% of people with a credit or debit card will experience fraud at least once.
Although most people think of money and theft when it comes to credit card fraud, it’s also a form of identity theft. Someone claims to be you and uses your resources and identity to make purchases. Therefore, in addition to taking your money, a person who commits debit or credit card fraud also steals your security and identity.
If you want to know more about credit card fraud, how it happens, and how to help prevent it, you’ve come to the right place. This article explains how people can hack your credit card account, the different types of credit card fraud, how to help prevent credit card fraud, and what your next steps should be.
Types of Credit Card Fraud
Part of what makes credit card fraud so confusing is that it can happen in many different ways. The fact that there are so many different types of credit card fraud also means thieves have multiple avenues to get the better of you. Here are the 12 different types of credit card fraud.
Card Not Present Fraud
Thanks to the prevalence of online and mobile purchases, card not present (CNP) fraud has quickly become the most common type of credit card fraud around. With this type of fraud, a person can acquire your credit card number through phishing scams, data breaches, or when you make online transactions. They can then use your credit card information to make fraudulent purchases without ever having a physical credit card.
Card Present Fraud
Before the days of online purchases, card-present fraud was the most common type of credit card fraud. With this type of fraud, a person will have your physical card because they stole it, or you lost it. They can also create a fake credit card using your ATM account information. In any case, they can then use the credit card to make purchases posing as you.
Lost or Stolen Cards
No matter how responsible you are, there’s a good chance you’ve had a lost or stolen credit card at some point. When this happens, the person who acquired your credit card can make purchases with the card until you cancel it.
In addition to online shopping being the new norm, managing credit card accounts online is also very common. While online access makes managing your account easy and accessible, it also opens you up to the possibility of account takeover.
Account takeovers are where someone steals the login information for your credit card account. With that info, they can make unauthorized purchases, money transfers, and transactions as easily as if they were you.
Although it’s spelled slightly differently, phishing is similar to fishing in that fraudsters use “bait” to trick you into giving away information. Phishing involves using fake emails, SMS messages, and messages through other platforms as bait. The message can appear to come from your bank or credit card issuer, leading you to a false sense of security.
Once you receive the message, you are asked to click on a link or give out your credit card information. If you do this, the fraudsters will gain access to your accounts and credit card numbers.
Application fraud is a form of credit card fraud that happens when someone learns personal information about you and uses it to open a credit card account in your name. They can gain this information by dumpster diving or accessing another of your online accounts, where they can gain access to your Social Security number, home address, and other personal information.
When you open a credit card account, two entities know your account information — you and the credit card company. While credit card companies have many security measures in place, they are not immune to the possibility of a data breach.
A data breach is when someone hacks into a credit card company and steals the information of people who have accounts with them. While data breaches are often detected and resolved quickly, they can lead to fraudulent charges on your account.
If you still receive credit card statements through the mail, a thief can steal these statements and gain access to your account.
In addition to having the ability to make fraudulent purchases on your behalf after they hack your account, fraudsters can also change important account information. This includes adding themselves as a member, changing your contact information, or changing the billing address, which could make it harder to detect credit card fraud.
Social engineering is one of the more devious types of credit card fraud. Using this method, someone contacts you under the guise of being a family member, friend, or customer service representative. They then ask for your credit card information and say it’s for a car accident, life-and-death situation, or a similar reason.
Carding or Skimming
Carding, also known as skimming, is when thieves use a device known as a skimmer to copy your credit card information when you make a purchase. This can happen at a gas station, ATM machine, or anywhere else you use a credit card. They then copy the information to create cloned cards, which they use to make purchases.
Finally, it’s possible that you think you’re the victim of credit card fraud when you actually aren’t. You might check your account and discover a strange transaction that you don’t remember making.
However, it’s possible that your spouse or child made the transaction without your knowledge, that you accidentally bought something online, or the purchase is coming up under a different transaction name than expected. This is known as friendly fraud and can lead to false fraud claims on your part.
How to Help Identify Credit Card Fraud
Credit card fraud is more difficult to identify and stop than you might think. Not all credit card companies issue alerts if they suspect fraudulent activity on your account because people can make some unusual purchases.
Therefore, it’s largely up to you to identify credit card fraud on your own and report it. Here are a few quick tips on how to do just that.
- Check your account regularly for unusual transactions or purchases you don’t remember making.
- Set up a fraud alert on your credit card accounts to report unusual activity.
- Check your credit report regularly to watch out for unusual dips or activity.
- Check your account for new users, changes in information, or other changes you didn’t authorize.
In most cases, by paying attention to your accounts and staying vigilant, you can help identify signs of credit card fraud and take the necessary actions to stop it.
How to Help Protect Yourself Against Credit Card Fraud
With all the different ways people can commit credit card fraud, you probably think there’s no way to avoid it. While it’s true that credit card fraud can happen to anyone, there are things you can do to help minimize this possibility, including the following.
- Be aware of phishing, malware, and other online schemes that fraudsters use, and don’t give your credit card or personal information to people you don’t know.
- Watch out for phone scams, and don’t give your credit card information to people over the phone unless you know who they are.
- Notify your credit card issuer immediately if you notice you’re missing one of your cards. They will then cancel the card.
If you suspect credit card fraud, you should immediately report it to your credit card company. You can explain the situation to them and verify that you didn’t make the purchases in question. Ultimately, they decide whether or not you’re the victim of credit card fraud. If you are, the Fair Credit Billing Act requires them to reimburse you for your losses under certain terms
You should also report the fraud to the major credit bureaus, so a fraud alert can be placed on your credit report.
Credit card fraud is extremely common and something you should be very aware of. It’s important to detect and report credit card fraud immediately, so you can get reimbursed for your losses and your credit score doesn’t suffer.
If you’re worried about credit card fraud and other forms of identity theft, consider using IdentityIQ identity theft protection.. With IdentityIQ identity theft protection, you get real-time alerts about possible suspicious activity detected on your accounts so you can take immediate corrective action.