If you have a credit card, you probably know that you need to keep it safe in order to make sure you don’t end up with strange charges on your account. Unfortunately, there are many types of credit card fraud, some of which are very hard to avoid.
Here at Elite Personal Finance, we want to inform you about the different types of credit card fraud, and how to avoid them.
This is the most common type of credit card fraud. If a card is lost or stolen, and then found, it can be used immediately, often without using a PIN. This can cause some serious stress and create a hassle for the person who lost the card.
Whether the card was lost or stolen, someone could end up using the card in many different ways. They can use it for online purchases and purchases at stores with non-PIN machines. They can forge your signature (as any signature is accepted for payment). It’s very easy to spend money just having someone’s card.
How to Prevent Credit Card Fraud
In order to prevent your card from being used, you must keep a record of your credit card info at all times. Then, call up your card provider to cancel the card and issue a new one. Your card will no longer work for anyone, and if you end up running into it again, the only thing you must do is destroy the card.
By cancelling your card immediately, you should be able to prevent future transactions. However, if you do not realize your card is missing in time, then you may end up paying for it later.
Pre-approved Credit Card Theft
Often times, we get pre-approved credit cards in the mail. All they have to do is be activated, which requires one’s name and date of birth, possibly Social Security Number. If someone has this information, they’re able to easily open a credit account, in your name, using a pre-approved credit card they stole from your mailbox. This is not just credit card fraud, but mail fraud, and is highly illegal.
How to Prevent Pre-Approved Credit Card Fraud
There are ways to prevent companies from sending you these cards. One way is to opt out by calling this number: 1-888-567-8688. Opting out this way will allow you to prevent these offers from coming in the mail for 5 years. If you still get mail, contact the provider and make sure you’re on as many ‘do not send’ lists as possible.
Cards can be skimmed, which essentially means having the credit card information stolen by being swiped through a card reader. This card reader then collects the information contained in the magnetic stripe of the card.
What happens is that this information, which includes your credit card number, your security code, and your PIN, can be charged multiple times by the merchant, can be used by anyone who has this information, and can be sold to the highest bidder.
Your credit card information is, in fact, quite valuable, especially if you have good credit and a high credit limit!
How to Prevent Card Skimming
Right now, skimming is somewhat hard to avoid if you don’t have a chip card. In the US, chip card readers are beginning to be mandatory, so skimming will become much less of a problem.
Don’t use ATMs in public places, only in banks. Many ATMs will simply steal your credit card info then either (1) rack up your balance, or (2) sell your info to the highest bidder. Also, be careful which restaurants you use your credit card at. There are a few restaurants that have skimmers on their point of sale machines.
‘Card Not Present’ Transactions
This is an extension of what we were discussing before. However, if someone has your credit card information, they could use that information to make transactions that do not require a physical card to be present. This is generally referred to as a “card not present” transaction, and they can be quite expensive.
These kinds of transactions include: online shopping, direct mail orders, and telephone orders. Any one of these transactions can be completed without having the actual card: the information on the card is usually enough.
How to Prevent These Transactions
It is not easy to prevent these transactions: however, there are some tips that can help you look out for fraudulent transactions. These tips are general and can help you spot fraud, even if you still have your card.
- If you have never used online shopping before, check to see if any online transactions have been made. Fraudsters tend to prefer new victims, because it’s harder to detect, or even determine, out-of-place activity.
- If there are any strange looking transactions that you would not have made, make sure that you keep a record of what they are and where they came from.
Identity Fraud: Credit Cards
Credit cards are a very popular target for identity theft: most identity theft is related to credit cards in some way. Having your identity stolen can be quite painful and it can potentially do a lot of harm to your credit.
One of the most prevalent types of identity theft is application fraud: someone uses your name and information in order to open up a new credit card that you have no idea about. They can then spend irresponsibly and rack up a balance, leaving you responsible for the consequences.
Using someone else’s credit card is a type of identity fraud: so, in most cases, if someone is committing credit card fraud, they are also committing identity fraud. This is important to note and knowing this could help you potentially get a good settlement, if you ever find out the perpetrator.
How to Prevent Identity Fraud
Keep your identity secure at all times. Make sure none of your identifying info such as date of birth or Social Security Number is available on the Internet. Use strong passwords, and be careful who you share information with.
We have an entire series of articles dedicated to identity theft prevention services, which you can read here. We also have several articles about identity theft, which should be required reading for anyone who is concerned about their good credit.
In extreme cases, a credit freeze is required to make sure your good name stays protected. A credit freeze, which can be requested by the credit bureaus, prevents anyone from taking out new credit under your name until your credit is unfrozen. This does not impact your credit score.
Card Tap Fraud
In some countries, there exists technology that allows you to simply ‘tap’ your card on a machine and have it register the payment. This makes lines quicker and makes payment much less of a hassle. However, this comes with it a danger: no PIN is required to be entered, and the card does not need to have its magnetic stripe swiped.
A scam that has become popular in Canada is where the fraudster has a point-of-sale with Tap payment enabled. He or she then takes the point of sale machine and taps it against someone’s pocket lightly, registering a payment. No more than $30 can be charged using this method, however this fraud can end up becoming more commonplace as countries such as the United States start to adopt the technology.
How to Prevent Card Tap Fraud
It’s not a necessity to have Tap enabled on your cards. If your country offers Tap services such as Payware, then simply order a card without that functionality. This might prevent you from using this quick technology, but it is worth living without if you are concerned.