Credit card fraud can happen to anyone. A stolen card number, a fake text message pretending to be from your bank or a compromised retailer database could expose your financial information in seconds. And unfortunately, even cautious people can become victims through data breaches, sophisticated phishing scams or hidden card skimmers.
Here, we’ll review some common types of credit card fraud so you know what to look out for, as well as steps you can take to protect yourself.
- Credit card fraud includes stolen card numbers, phishing scams, skimmers and unauthorized purchases using lost or compromised cards.
- Preventing fraud requires ongoing habits such as monitoring accounts, using transaction alerts, avoiding suspicious links and protecting both physical and digital payment information.
- Consumer protections can limit losses for unauthorized charges when credit card fraud occurs, but it’s still best to be proactive.
What Is Credit Card Fraud?
Credit card fraud occurs when your credit card is used without your authorization to make purchases or withdraw funds. That fraud can happen either in stores or online. A criminal could steal your credit card from your wallet or your credit card number by hacking into databases or through phishing scams, malware or fake websites.
Credit card fraud may involve:
- Unauthorized purchases
- Fake online payment requests
- Account takeovers
- Counterfeit cards
- Identity theft
While many credit card issuers have fraud detection systems designed to catch suspicious activity, it’s also important to be vigilant yourself.
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Types Of Credit Card Fraud
Credit card fraud can take many forms, so it’s important to understand the scope of what it entails.
Stolen Card Numbers
A criminal can steal your credit card number using different methods: They can steal your actual card, hack a website where your credit card was used or utilize malware to get credit card information off your personal devices.
The tricky thing about digital credit card fraud is that you may not realize right away that your credit card number has been stolen. It’s one thing if someone steals your physical credit card and it goes missing. But you may not become aware that your card number has been compromised until unauthorized purchases appear on your credit card account.
Phishing
Phishing scams are designed to trick people into giving away sensitive financial information. You might get an email, text or phone call from someone pretending to be from your bank or credit card issuer. From there, you might enter credit card or personal details that allow a criminal to steal your card number.
For example, if you click on a link that appears to be from your bank, you might enter your user name and password because you think you’re logging in to your credit card account. In reality, you may be handing a criminal the keys to your account without being any the wiser.
Skimmers
Card skimmers are hidden devices attached to credit card readers that can secretly capture credit card information during transactions. Some skimmers also include tiny hidden cameras or fake keypads designed to capture PINs during ATM transactions.
Data Breaches
Large-scale data breaches can expose many credit card users to fraud at once. Retailers, healthcare providers and financial institutions can be vulnerable to these breaches even with reasonable security measures.
In a data breach, a criminal could get ahold of your credit card number, payment data and password. They might also get access to your personal information, including your Social Security number, allowing them to open a credit card account or apply for a loan in your name.
Account Takeover
Account takeover fraud occurs when a criminal gains access to an existing credit card account. Once a criminal has the right information, they can change your password and login details, effectively locking you out of your account.
Lost Or Stolen Physical Cards
If you don’t contact your issuer immediately after losing your credit card, a criminal can find it and start using it. A criminal could also steal your credit card from your wallet or even your mailbox (for example, if you’ve been issued a new card and a criminal intercepts that envelope).
Counterfeit Cards
Sometimes, criminals will take your credit card number and use it to create a fake card they can use in person.
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How To Prevent Credit Card Fraud
Preventing credit card fraud often boils down to developing smart habits. Here are some specific things you can do to prevent credit card fraud.
Monitor Accounts Regularly
Reviewing your credit card transactions frequently is one of the most effective ways to catch fraud early. You may be inclined to log in to your credit card account only once a month to read your statements. But logging in weekly could help you spot fraud sooner.
Set Up Transaction Alerts
Many credit card issuers allow cardholders to enable purchase alerts through mobile apps or text messages. These alerts notify you when transactions exceed certain amounts or come from suspicious sources.
Use Secure Websites Only
Using secure websites only can help keep your credit card number safe. HTTPS encryption and secure checkout systems are designed to keep your data from getting compromised.
Also, look closely at the URL and website. If there is a misspelling or anything suspicious, consider it a red flag. You can also use this Google tool to see if a website has been flagged as suspicious.
Avoid Using Public Wi-Fi Networks
Public Wi-Fi often lacks proper encryption, making it easy for criminals to intercept payment information. A safer bet is to use mobile data or a virtual private network, which you can download onto your phone, for financial transactions.
Look Out For Suspicious Links
If a link looks suspicious – like it contains strange characters or the institution or merchant name is misspelled – it’s a sign you may be looking at fraud and that you absolutely should not click.
Also, be wary of unsolicited text messages or emails from your bank or credit card company asking you to verify information in a link. When in doubt, open the official app or type the company’s website directly into a browser to access your account.
Protect Physical Cards
Knowing where your credit cards are at all times could help you avoid fraud. Make sure to keep your cards in a secure location. And if you receive paper credit card statements in the mail, shred them instead of throwing them away, as they could contain your credit card number and other identifying information.
Also, if you know you’re expecting a new credit card by mail, monitor your mailbox carefully and aim to retrieve that envelope as soon as possible.
Use Contactless Payments When Possible
Skimming can be difficult to detect because such devices can be very discreet. In most cases, using contactless payments or digital wallets (like Apple Pay or Google Wallet) can reduce skimming risk because the actual card number is not transmitted directly during the transaction.
Review Your Credit Reports Regularly
Your credit report is a summary of your borrowing history. On your credit report, you should find a list of your open credit accounts and recent hard inquiries. If there’s an account or hard inquiry you don’t recognize, it could be a mistake, but it could also be a sign that you’ve fallen victim to fraud.
It’s a good idea to check your credit report once a month from all three bureaus: Experian, Equifax and TransUnion. You’re entitled to a free copy of your credit report from each of the three nationwide credit bureaus every 12 months, and an additional free report if you have a fraud alert on your credit file.
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How To Report Credit Card Fraud
If you suspect or know you’ve been a victim of credit card fraud, it’s important to act quickly.
First, contact your credit card issuer and tell them what’s going on. If you received a suspicious link, loop them in. If you see unauthorized charges on your account, provide details about those charges.
You may be able to place a fraud alert on your credit card online, and many credit card companies have a fraud alert hotline available at all times (a hotline number may be on the back of your card).
After reporting the fraud, make sure to do the following:
- Update your account password.
- Dispute unauthorized charges on your account.
- Request a replacement card (which may have a new account number).
- Enable multifactor authentication on your account.
- Review recent account activity carefully.
- Update bills set to autopay with your new card number once you get your replacement card in order to avoid being delinquent.
If you suspect that it’s not just your credit card details that have been stolen, but actually your identity, make sure to do the following:
- Put a fraud alert on your credit reports.
- Freeze your credit.
- File a report through IdentityTheft.gov.
- Monitor tax records and bank accounts.
While you do need to put a credit freeze in place with each of the three bureaus (Experian, Equifax and TransUnion), you should have to do only one fraud alert. The first credit bureau you contact has to tell the other two to place a fraud alert on your credit report.
Credit Card Fraud: Consumer Protections
Under the Fair Credit Billing Act, your total losses from unauthorized credit card charges are generally limited to $50. But many card issuers offer zero-liability policies.
That said, it’s important to report credit card fraud as soon as you become aware of it. Reporting fraud quickly could prevent additional unauthorized charges on your account.
How To Prevent Credit Card Fraud: Your Personal Checklist
Preventing credit card fraud is something you can do by incorporating a few habits into your regular routine:
- Review credit card account activity frequently.
- Enable transaction alerts.
- Avoid clicking suspicious email or text links.
- Use strong, unique passwords.
- Turn on multifactor authentication.
- Avoid making purchases on public Wi-Fi networks.
- Protect your physical cards, including new cards that come in the mail.
- Monitor your credit reports regularly.
- Report suspicious charges immediately.
- Be on alert for phishing texts pretending to be banks or retailers.
The Bottom Line: Protect Yourself By Knowing How To Prevent And How To Report Credit Card Fraud
Credit card fraud can happen to anyone, but there are simple steps you can take to prevent it. The most important thing, though, is staying aware.
Fraud tactics continue to evolve to steal credit card information. The more vigilant you are, the more you can reduce your personal risk.
Maurie Backman
Maurie Backman has more than a decade of experience covering personal finance topics that include mortgages, loans, retirement, Social Security, and investing. Prior to becoming a full-time writer, she worked in the financial industry as well as in product design and marketing. Maurie holds a bachelor's degree from Binghamton University, where she studied creative writing and finance. She was happy to combine her two areas of study into a career that allows her to educate consumers on a host of financial topics.
