What is Credit Card Fraud? The Signs and How to Report It

Credit card fraud is the unauthorized use of a credit card or credit account to make purchases or withdraw cash. This can happen in a variety of ways, including:

• Stealing credit card information: This can happen through skimming, which is when a device is attached to a card reader to collect information from the magnetic strip on a credit card, or by hacking into a computer or online account where credit card information is stored.
• Using a lost or stolen credit card: This occurs when someone finds a credit card and uses it to make unauthorized purchases.
• Creating a fake credit card: This happens when a criminal uses someone else’s personal information to apply for a credit card in their name.
• Making unauthorized online purchases: This happens when a criminal uses a stolen credit card or account information to make purchases online.
• Phishing: This is a tactic where a criminal sends an email or text message purporting to be from a legitimate organization such as a bank or credit card company, asking you to provide personal information, like your credit card number, password, or social security number.

Credit card fraud can cause financial losses for both the cardholder and the card issuer. It is important to report any suspicious activity or unauthorized charges to your card issuer immediately.

How to Protect Yourself from Credit Card Fraud

Protecting your credit cards from fraudulent use involves a mix of vigilance, technology, and common sense practices. Here are several strategies to help safeguard your credit cards:

• Monitor Your Accounts Regularly: Regularly check your credit card statements and online banking platforms for any unauthorized transactions. Many banks and credit card companies offer alert services that notify you of any unusual activity.
• Use Strong, Unique Passwords: For online accounts related to your credit cards, use strong, unique passwords. Consider using a password manager to generate and store complex passwords.
• Enable Two-Factor Authentication: Whenever available, enable two-factor authentication (2FA) for your online accounts. This adds an extra layer of security by requiring a second form of verification (like a code sent to your phone) in addition to your password.
• Be Cautious with Your Credit Card Information: Be mindful of where and how you share your credit card information. Avoid providing your credit card details over the phone unless you initiated the call to a known, legitimate number.
• Use Secure Networks for Transactions: When making online purchases, ensure you’re on a secure connection (look for “https://” in the web address and a lock icon). Avoid conducting financial transactions on public Wi-Fi networks.
• Keep Your Credit Cards Safe: Physically protect your credit cards. Don’t leave them in easily accessible places, and consider using an RFID-blocking wallet to prevent skimmers from stealing your card information remotely.
• Report Lost or Stolen Cards Immediately: If your card is lost or stolen, report it to your credit card issuer immediately. They can freeze the card and prevent fraudulent transactions.
• Review Your Credit Reports Regularly: Keep an eye on your credit reports from the three major credit bureaus (Equifax, Experian, and TransUnion) for any unfamiliar accounts or inquiries. You’re entitled to one free report from each bureau per year through AnnualCreditReport.com.
• Use Virtual Credit Cards for Online Purchases: Some credit card issuers offer virtual credit card numbers for online shopping. These are temporary numbers linked to your account that can be used for a limited time or for specific merchants, reducing the risk of fraud.
• Educate Yourself on Phishing Scams: Be aware of phishing attempts via email, text, or phone calls. These scams try to trick you into providing personal and financial information. Never click on suspicious links or respond to unsolicited requests for your credit card information.

Protecting your credit cards from fraudulent use involves a combination of vigilance, technology, and adopting secure habits. It’s crucial to monitor your accounts regularly for any unauthorized transactions. Many banks and credit card companies offer alert services that can help notify you of unusual activities. Implementing strong, unique passwords for online accounts and enabling two-factor authentication wherever possible adds an additional layer of security, making it harder for fraudsters to gain access to your information.

Being cautious with your credit card information, especially when sharing it over the phone or online, is essential. Always ensure you’re making transactions on secure networks, identifiable by “https://” in the web address and a lock icon, and avoid using public Wi-Fi for financial transactions. Physically, keep your credit cards safe and consider using an RFID-blocking wallet to prevent remote skimming.

If your card is lost or stolen, reporting it to your credit card issuer immediately can prevent fraudulent transactions. Regularly reviewing your credit reports from the three major bureaus (Equifax, Experian, and TransUnion) can alert you to any unfamiliar accounts or inquiries, indicating potential fraud.

Some credit card issuers offer virtual credit card numbers for online shopping, providing a temporary, secure number linked to your account for a limited time or specific merchants. This can significantly reduce the risk of your card number being stolen and misused.

Common Signs of Credit Card Fraud

Here are a few signs that may indicate credit card fraud:

• Unfamiliar charges on your credit card statement: If you see charges that you don’t recognize, it’s possible that someone has used your credit card without your knowledge.
• Missing credit card: If you can’t find your credit card or it has been lost or stolen, it’s possible that someone has taken it and is using it to make unauthorized purchases.
• Unexpected credit card statement: If you receive a credit card statement for an account that you didn’t open, it’s likely that someone has used your personal information to open a fraudulent account.
• Unsolicited phone calls or emails: Be cautious of unsolicited phone calls, emails, or text messages asking for your credit card information, as these may be attempts to obtain your information for fraudulent purposes.
• A sudden decrease in credit score: If you notice a sudden decrease in your credit score, it’s possible that someone has used your credit card without your knowledge, causing you to miss payments.
• Unusual account activity: This can be noticed on your account statement, if you see charges or withdrawals happening at different locations or times of the day, it could be an indication of fraud.

Recognizing the signs of credit card fraud is key to preventing further damage to your finances. One common indicator is finding unauthorized transactions on your statement, which might range from small, seemingly insignificant charges to large purchases. These transactions may occur anywhere in the world, not necessarily where you live or frequently shop.

Receiving an unexpected decline of your credit card for no apparent reason can also signal fraud. This might happen because a fraudster has maxed out your credit line. Similarly, getting contacted by your credit card issuer about suspicious activity can be an early warning sign. Credit card companies monitor accounts for unusual patterns and may reach out if they detect something out of the ordinary.

Noticing new credit cards or account statements in the mail that you didn’t apply for can indicate someone has opened accounts in your name. Additionally, missing bills or other mail could suggest someone has changed the mailing address associated with your credit card account to hide fraudulent activities.

Receiving calls or letters about purchases you didn’t make is another red flag. Fraudsters might not only target your existing accounts but also use your identity to open new ones and rack up charges elsewhere.

A significant yet often overlooked sign is a sudden drop in your credit score. Since credit scores are sensitive to credit utilization and payment history, unauthorized use of your credit card can negatively impact your score.

If you have online banking or a mobile banking app, you might receive notifications of password changes, address updates, or other account modifications you did not initiate. These digital alerts can be among the earliest indicators of fraudulent activity on your account.

How to Report Credit Card Fraud

If you suspect credit card fraud, it’s important to report it as soon as possible to minimize the potential damage. Here are a few steps to follow to report credit card fraud:

• Contact your credit card issuer: Call the customer service number on the back of your credit card and report the fraud. They will likely cancel your card and issue a new one. They will also open a fraud investigation and may ask you to provide documentation of the unauthorized charges.
• Review your credit report: Request a copy of your credit report from all three credit bureaus (TransUnion, Equifax, and Experian) to ensure there are no other fraudulent accounts open in your name.
• File a police report: Contact your local police department and file a report. You will need to provide documentation of the unauthorized charges and the police report can be used as evidence during the investigation.
• Notify the Federal Trade Commission: You can file a complaint with the Federal Trade Commission (FTC) by visiting their website or by calling 1-877-ID-THEFT.
• Keep records: Keep copies of all documentation related to the fraud, including the police report, any correspondence with your credit card issuer, and any fraudulent charges on your credit card statement.

Reporting credit card fraud promptly is crucial to minimizing damage and resolving any unauthorized transactions. Start by contacting your credit card issuer directly; you can usually find a dedicated fraud hotline on the back of your credit card or on the issuer’s website. Inform them about the fraudulent transactions and any other suspicious activity you’ve noticed. Your credit card company will likely freeze or cancel your current card and issue a new one to prevent further unauthorized use.

It’s also a good idea to review your recent credit card statements in detail and report any additional unrecognized transactions during this call. The issuer may ask for specific details about your last legitimate transaction to help identify the point at which the fraud occurred.

After notifying your credit card issuer, consider reporting the fraud to the major credit bureaus: Equifax, Experian, and TransUnion. Requesting a fraud alert on your accounts makes it harder for a fraudster to open new accounts in your name. You might also consider placing a credit freeze on your reports, which prevents creditors from accessing your credit report entirely, offering an even higher level of protection.

• Equifax
  • 1-800-525-6285
  • www.equifax.com
• TransUnion
  • 1-800-680-7289
  • www.transunion.com
• Experian
  • 1-888-397-3742
  • www.experian.com

For added security and to assist in the investigation, report the fraud to the Federal Trade Commission (FTC) via their website or phone line. The FTC provides resources and guidance for dealing with fraud and can offer a recovery plan based on your specific situation. Reporting to the FTC also helps them collect data about fraud trends and support law enforcement efforts.

In cases where your personal information has been compromised beyond your credit card, such as your Social Security number being stolen, you may need to file a report with your local police department. This step is often necessary for identity theft that involves multiple types of fraud or significant financial loss.

Remember to keep records of all communications related to the fraud report, including whom you spoke with, dates, and any follow-up actions you’re advised to take. This documentation can be essential for resolving the fraud and recovering from any financial impact.