If you have a credit card, you probably know that you need to keep it safe 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.
ElitePersonalFinance wants 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. 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 straightforward to spend money just having someone’s card.
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 canceling your card immediately, you should be able to prevent future transactions. However, if you do not realize your card is missing in time, you may pay a high price for that later.
Often, 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 also mail fraud, and it is highly illegal.
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 this mail, contact the provider and make sure you’re on as many ‘do not send’ lists as possible.
Cards can be skimmed, which means having the credit card information stolen by swiping 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!
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 that that skimming will become much less of a problem.
Don’t use ATMs in public places, only in banks. Many ATMs will 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. A few restaurants have skimmers on their point of sale machines.
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 it can be quite expensive.
These transactions include online shopping, direct mail orders, and telephone orders. Any one of these transactions can be completed without having the actual card: the card’s information is usually enough.
It is not easy to prevent these transactions: however, some tips 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.
Credit cards are a viral target for identity theft: most identity theft is somehow related to credit cards. 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 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 get a good settlement if you ever find out the perpetrator.
Keep your identity secure at all times. Ensure 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 with 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 concerned about their good credit.
A credit freeze is required to ensure your good name stays protected in extreme cases. A credit freeze, which the credit bureaus can request, prevents anyone from taking out new credit under your name until your credit is unfrozen. This does not impact your credit score.
In some countries, technologies allow you to ‘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 puts you in danger. And this is that 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. They then take the point of sale machine and lightly taps it against someone’s pocket, registering a payment. No more than $30 can be charged using this method. However, this fraud can become more common as countries like the United States start to adopt the technology.
It’s not a necessity to have Tap enabled on your cards. If your country offers Tap services such as Payware, then 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.