What to Do if You Experience Credit Card Fraud

No one wants to experience credit card fraud. When you detect fraudulent purchases, it’s usually accompanied by a sinking feeling about the situation.

The unfortunate reality is that credit card fraud is a regular occurrence. If you are unlucky enough to experience credit card fraud, following some best practices can help you get the situation under control as soon as possible.

Let’s explore what you should do if you experience credit card fraud.

What Is Credit Card Fraud?

Before we cover how to deal with credit card fraud, let’s define what this unsavory situation entails. Essentially, credit card fraud is a form of identity theft in which criminals use stolen credit card information to make purchases or obtain cash.

Since the credit card is in your name, the criminals are putting your financial situation at risk. When a criminal gets a hold of credit card information, you’ll often see a string of purchases. After all, this is their opportunity to run up credit card charges without footing the bill.

How Credit Card Fraud Could Impact Your Credit Score

The good news is that credit card fraud is mostly an inconvenience. While you’ll have to spend some time sorting things out, it shouldn’t have a lasting impact on your financial situation. Many credit card issuers offer $0 liability protection. In other words, if a thief racks up charges on your credit, you won’t be footing the bill.

The bad news is that investigating credit card fraud can be a lengthy process. In some cases, it can take months for a credit card issuer to get to the bottom of fraud charges. As the charges sit on your credit card, it’s possible your credit card balance will take a hit.

Types of Credit Card Fraud

The end result of credit card fraud is that a thief uses your credit card information to make purchases or get access to cash. But the mechanics of credit card fraud vary. Here’s a look at the common types of credit card fraud.

Physical Theft

The most obvious approach to credit card fraud is stealing your physical credit card. When a thief has possession of your actual credit card, they can use it to make purchases or potentially access cash.

Some common ways for thieves to get ahold of your credit card include swiping them from restaurant tables and pickpocketing your entire wallet. Some thieves get credit cards by stealing newly issued cards in the mail.

Cloned Cards

Cloned credit cards are created by thieves with access to your credit card information. Criminals can use the details to stamp out new physical credit cards to make illegal purchases.

In many cases, the cloned credit card information is stolen via skimmers. Skimmers are physical devices that fit over a card reader to steal your information while making a purchase. These devices are commonly placed on gas pumps and other sales terminals. Luckily, EMV chip credit cards make it more difficult for skimming devices to steal your information.

Account Takeovers

If a criminal has enough of your personal information, they might be able to take over your account. Typically, this involves contacting the credit card issuer to change your passwords and get new cards issued in their name. Once locked out of your account, it can take some time to resolve this issue.

Card-not-present Fraud

When a theft makes a purchase without a physical credit card, that’s considered card-not-present fraud. For example, if a thief goes on an online shopping spree, they don’t need your physical credit card to make purchases.

How to Avoid Credit Card Fraud

Regardless of how it occurs, no one wants to deal with credit card fraud. Not only is the experience an inconvenience, but it could also have an impact on your credit score.

Luckily, there are some best practices you can implement to avoid running into credit card fraud.

Review Credit Card Statements and Activity

The first line of defense against credit card fraud is to stay on top of your credit card statements. A quick look through your purchases will help you catch any unfamiliar transactions.

If possible, make it a point to review your credit card statements and activity at least once per month. Hopefully, you won’t spot anything untoward. But if you spot an unfamiliar transaction, dispute the charges immediately.

When it comes to credit card fraud, time is of the essence. The Fair Credit Billing Act (FCBA) limits the liability of consumers for unauthorized transactions to $50, but the act gives you 60 days to report fraudulent charges to the credit card issuer. If you don’t report the fraud within 60 days, you might not be eligible for the limited liability protection. Regularly reviewing your statements can help you avoid an uncomfortable situation.

Check Your Credit Reports

Credit reports directly impact your credit scores. They serve as a record of your credit activities. The information on your reports includes information tied to any credit cards associated with your name. So, if a criminal opens a credit card account in your name, it will likely show up on your credit reports.

With that, it’s smart to regularly check your credit reports. You can get free copies of your credit reports through AnnualCreditReport.com. When you check your credit reports, look for any unfamiliar accounts. If you spot an issue, dispute it with the credit bureaus.

Monitor Your Credit

Credit monitoring services are helpful tools. When you sign up for credit monitoring services, you’ll get alerts when something about your credit score changes. For example, if a thief tries to open a new credit card in your name, you’ll likely get a credit monitoring alert. You can use this information to stop a potential thief in their tracks by reporting the issue to the credit card issuer.

Luckily, many credit monitoring services are free. In fact, some credit card issuers offer these services to their customers.

Video: Which Type of Credit Monitoring Service Do You Need?

Want to find out more about selecting credit monitoring services? Credit expert John Ulzheimer gives a helpful rundown of the different types to consider in this Credit Countdown video. Watch it below, and be sure to subscribe to our channel over on YouTube if you like the video!

Secure Physical Cards

The simplest way for a criminal to steal credit card information is to swipe y

our physical card. Don’t give them the opportunity! While out and about, keep a close eye on your credit cards. You should keep your wallet under your protection at all times. For example, don’t leave your wallet sitting on a table while you duck into the restroom.

Avoid Phone Scams

Phone scams seem to multiply on a daily basis. When answering the phone, be vigilant about protecting your information. If someone calls to ask about personal information, like your credit card details or Social Security Number, hang up. In most cases, only criminals would be calling for this information.

Unfortunately, phone scams can seem very credible. If you are convinced that someone is calling from your bank or the government, it’s still not a smart move to hand over your information. Instead, look up the phone number of the agency or company online. Make a call to the published phone number. If the information request is legit, the company or government agency can help you move forward. If the call was a scam, you’ve avoided passing out your personal information.

Protect Yourself Online

The internet is a minefield of potential scams. While there are many things to love about the internet, the susceptibility to scams is not something to celebrate. As you navigate the digital world, it’s critical to protect yourself from roaming cybercriminals.

Before making a purchase online, ensure the website is secure. Secure websites start with ‘https://.’ In contrast, unsecured websites lack the ‘s.’ If asked to store your credit card information, try to skip the convenience.

Additionally, avoid using your credit card or accessing online banking while using any public Wi-Fi network. If you must make a purchase via public Wi-Fi, make sure that you are using a reputable virtual private network service.

What to Do if You Are the Victim of Credit Card Fraud

Even the most vigilant credit card user might find themselves victims of credit card fraud. The reality is that credit card fraud is very common. According to the Federal Trade Commission, millions of credit card fraud instances happen every single year.

If you are the victim of credit card fraud, you aren’t alone. Below are the things you should do to get back on track after credit card fraud.

Freeze Your Credit Card

If you suspect credit card fraud, the first step is to freeze your account. Whether you think your card has been physically stolen or you’ve noticed unfamiliar charges, freezing the credit card will stop any future purchases from the criminal.

Most credit card issuers make it easy to freeze your credit card. Depending on your issuer, it might be possible to tackle this task quickly in the bank’s mobile app.

Contact the Credit Card Issuer

Once you’ve noticed a fraudulent transaction, report it to the credit card issuer immediately. For some, this means reporting the issue through a website or mobile app. For others, this might mean calling the number on the back of your credit card. In either case, your credit card issuer will likely provide clear steps for reporting the fraudulent activity.

After the fraud is confirmed, your credit card issuer will likely cancel the credit card and issue you a new one with new information.

Add a Fraud Alert to Your Credit Report

If you believe that someone unsavory got ahold of your information, it’s smart to place a fraud alert on your credit report. The fraud alert requires lenders to verify your identity before issuing any new lines of credit.

Contact Law Enforcement

After you’ve contacted your credit card issuer, you can report the fraud to law enforcement. The Federal Trade Commission has a specific form for identity theft victims to report the crime. You can find this report on the FTC website. If you want more support, you can file a crime report with your local law enforcement officials.

Depending on the situation, the police may or may not investigate the situation. However, filing a report is still helpful to law enforcement officials looking at the big picture. It’s possible your report will help them track down the perpetrator. Plus, importantly, you may need the legal documentation to prove to creditors that your claim of identity theft is legitimate.

Notify the Credit Bureaus

The credit bureaus should be able to help you remove any damage caused by the thief. After all, most thieves run up credit card debt they don’t intend to pay off on time. If the theft causes you to miss a payment or results in a maxed-out credit card, that can hurt your credit score.

Getting in contact with the credit bureaus is the first step to getting false information removed from your credit report. Be prepared to provide details about the credit card theft incident. You’ll need to have evidence of fraudulent charges to get the information removed.

Frequently Asked Questions

Do Credit Card Frauds Get Caught?

In some cases, investigators are able to solve credit card fraud cases. In other situations, the credit card fraudster is never caught. In either case, the credit card account holder is not liable for damages greater than $50 thanks to the Fair Credit Billing Act.

What Is the Fair Credit Billing Act?

The Fair Credit Billing Act (FCBA) limits the liability of consumers for unauthorized transactions to $50. The catch is that you must dispute the false charges within 60 days.

The Bottom Line

Credit card fraud is an uncomfortable situation. Although no one wants to deal with the hassle, handling the issue promptly can help you avoid unnecessary financial stress. If you suspect credit card fraud, report it to your issuer immediately. And as you move through life with the help of credit cards, do your best to protect your credit card information from the prying eyes of potential thieves.