Finance

Credit card fraud is a large problem, with the Federal Trade Commission (FTC) collecting more than 167,000 reports of fraudulent credit card activity in 2018. The good news: If you are a victim of credit card fraud, your responsibility for the fraudulent charges will be capped at $50 and-with many card issuers-you won’t be responsible for any charges made to your account. But reporting credit card fraud through the proper channels is just the first step. In addition to filing fraud reports and ordering a new card, you should consider putting a credit freeze on your accounts and checking your financial statements on an ongoing basis for any unusual activity.

Understanding the difference between credit card fraud and identity theft

Identity theft takes place when a person’s key identifying information, such as their name or Social Security Number, is wrongfully obtained and used for economic gain or some other malicious purpose. Credit card fraud occurs when a consumer’s credit card account is used without their permission or a new account is created in their name.

Types of credit card fraud

Credit card fraud can take many different forms. Here are the main things to watch out for:

  • Lost or stolen cardsA card may be picked up and used after falling from your pocket, or get taken from your wallet or mailbox. Both of these situations are considered fraud.
  • Account takeoversTakeovers occur when a fraudster contacts your card issuer and pretends to be you, then orders a new card to their address.
  • Counterfeit cardsElectronic devices, like skimmers, can be used by fraudsters to copy your card information when they use it to debit your account, and then reprint it on another card.
  • «Card Not Present» (CNP) transactionsIf a fraudster acquires your card number and uses it without the physical card present-e.g., in an online purchase-this constitutes a CNP transaction.
  • Falsified credit applicationsMany card issuers mail out «pre-approved» credit card offers. A fraudster can intercept one of these offers and complete it to get a new card in their name. While credit card applications from major card issuers will require many different proofs of identity to finalize approval and prevent fraudsters from opening these pre-approved lines of credit, victims of identity theft should review their credit report regularly to avoid fraud.

If you think you see fraudulent activity on your card, however, don’t hesitate to take action and contact your credit card issuer to make a report. You won’t be liable for transactions made without your authorization, but it’s important to put a stop to fraud as quickly as possible.

Start with your card issuer

  • Contact your card issuer via the phone number on the back of the card or the issuer website’s live-agent chat.
  • Tell the customer service representative that you think you were the victim of fraud. The agent may have you confirm recent transactions to be sure any authentic purchases are processed correctly.
  • Ask for your account(s) to be suspended or closed. Be sure to change any passwords or PINs you think may have been compromised.

Contact the credit bureaus

  • Reach out to one of the three bureaus (Equifax, Experian or TransUnion); confirm your identity and ask for a free fraud alert to be linked to your report. Once the alert is placed, it will become much harder for fraudsters to use your information maliciously. Note that you only need to order a fraud alert with one bureau: the others will be notified automatically.
  • You can extend the default fraud alert lifespan (one year) to seven years, but you’ll need a police report or the Federal Trade Commission report to do this.

Notify the authorities

  • Fill out an identity theft report with the FTC at IdentityTheft.gov. The FTC is a federal law enforcement agency, so if you inform them that you are the victim of fraud, you won’t have to file a police report locally.
  • If you do opt to file a police report, bring the Identity Theft Report that you complete for the FTC, and make sure you make a copy for your records.

Protect your identity and prevent credit card fraud in the future

When you know how credit card fraud occurs, you can take steps to prevent fraud in the future.

Understand the threats

This guide is just one of the many resources available to understand and combat identity theft-including credit card fraud. Browse the FTC and Consumer Financial Protection Bureau (CFPB) websites for more guidance on the forms that identity theft can take.

Carefully review your credit card statements

Sometimes, the first evidence of credit card fraud is on your card statements. To maintain even more control of your card account, use your bank’s mobile app or website to regularly verify charges.

Order your free credit report as often as you can

You can order one free credit report annually from each of the credit bureaus. Consider rotating your free credit reports: by getting one every four months, you can stay informed of any reported changes to your credit profile.

Protect your information, online and off

Shred any piece of paper that has your credit card number on it, and don’t write down your card number anywhere that thieves might be able to access it. Also, be vigilant about protecting your card use online by only filling out card information on websites you trust. You can look for the lock icon in your browser’s address bar to be sure you’re buying from a secure site.

Watch for and report credit card fraud

Credit card fraud can happen to anyone, so remember to practice good data management to keep your personal information out of fraudsters’ hands. If you’ve recently had to deal with credit card fraud, you’re not alone. According to the Federal Trade Commission, credit card fraud was the most common form of identity theft reported in 2020, with over 393,2017 reports from people who had their current credit accounts compromised. If you spot suspicious charges on your credit card, there are steps you can take to report the fraud and ensure you don’t have to pay for someone else’s purchases. Let’s take a close look at how to identify credit card fraud, how to report credit card fraud and how to stop unauthorized credit card charges.

What is credit card fraud?

Any time a credit account is used without the owner’s knowledge or consent, that account is being used fraudulently. If you fall for a phishing email and unusual charges begin appearing on your credit card account, that’s credit card fraud. If you swipe your card at a gas station without realizing you just inserted your card into a credit card skimmer, that’s credit card fraud. If a family member or roommate steals your credit card and goes on a shopping spree, that’s credit card fraud. If you borrow your spouse’s credit card without their permission, you might be unwittingly committing credit card fraud yourself. Sometimes this kind of fraud happens on a massive scale. The Marriott security breaches, for example, put millions of people at risk of identity theft. Other times, fraudsters create targeted scams to trap people one at a time. No matter how the fraud happens, the result is pretty much the same: Once a hacker or scammer has access to your credit card number and/or personal information, they can use that information to make purchases on your existing credit cards or take out new lines of credit under your name.

How to report credit card fraud

If you suspect credit card fraud, know your rights. Most credit card issuers offer zero fraud liability on unauthorized charges—but you still have to know how to stop unauthorized credit card charges before you can take advantage of that protection. Here are three steps you can take to report credit card fraud and protect yourself against multiple fraudulent transactions on the same credit card account.

Contact your credit card issuer

The first step in reporting credit card fraud? Contact your credit card issuer. In some cases, your credit card issuer will contact you first—you might receive an email or a mobile alert asking if a recent charge looks familiar, for example. In other cases, you’ll need to report the unusual or suspicious charge yourself by calling the number on the back of your credit card. The Fair Credit Billing Act states that you must report fraudulent charges within 60 days of receiving the billing statement containing the suspicious charge. This means that if you receive your credit card statement on the first of the month, you have 60 days from that date to report any potentially fraudulent charges. However, it’s a good idea to contact your credit card issuer as soon as you notice any unusual activity on your card—whether you’re reviewing your monthly statement or checking the transactions that recently posted to your online account.

Change your passwords

After you let your credit card issuer know that you suspect your credit card account has been compromised, it’s a good idea to change your passwords. Start by changing the password associated with the credit card in question—then consider changing the passwords on any websites or accounts on which that credit card is stored as a method of payment. If you have the option to implement two-factor authentication on your accounts, now’s a good time to set it up. These security measures will help protect you from repeated credit card fraud.

Update mobile wallets and online accounts

When you report credit card fraud, your credit card issuer is likely to cancel your current credit card and send you a new card with a new credit card number. After your new credit card arrives, take the time to update your mobile wallets and online accounts—especially if you have automatic payments set up. That way, you won’t accidentally fall behind on a subscription or bill. If you used your old credit card to make purchases on sites like Amazon, make sure you update those payment methods as well.

How to protect yourself from credit card fraud

Knowing how to report credit card fraud is one thing—but how do you protect yourself from credit card fraud in the first place? Here are three ways to keep an eye on your credit cards and make it harder for thieves to make purchases in your name.

Review your credit card statements

The best way to protect yourself from credit card fraud is to review your credit card statements every month. Even if you’re the kind of person who regularly logs into your credit card app to check your available credit or review posted transactions, it’s still a good idea to read your credit card statement every time it hits your inbox or mailbox. When you review your credit card statement, take a close look at each of the transactions associated with your account. Do any purchases look unusual or suspicious? If you suspect that one or more of the charges on your account might be fraudulent, contact your credit card issuer right away.

Set up mobile alerts

Another good way to protect yourself from fraud is to set up mobile alerts. When you activate mobile alerts on your credit card account, your credit card issuer will send you a notification every time a suspicious charge posts to your account. Then, you’ll have the option to let your issuer know whether you made the charge yourself, or whether the charge might be fraudulent. Fraud protection isn’t the only benefit you’ll get by setting up mobile alerts. Mobile alerts can remind you when your next credit card payment is due and let you know when your most recent payment has gone through. You can also receive notifications every time your account reaches a certain balance—or every time you make a purchase above a certain dollar amount. You can even get a notification every time there is a new charge on your card.

Freeze your credit reports

Protecting your current credit accounts from fraud is an important step—but what if identity thieves try to take out new lines of credit under your name? The best way to protect yourself from this kind of credit card fraud is by freezing your credit reports. When your Equifax, Experian and TransUnion credit reports are frozen, anyone who tries to open a credit card or apply for a loan under your name will be declined. This prevents identity thieves from taking out credit cards or loans under your name, but it also prevents you from opening new lines of credit—so if you want to apply for a new credit card, shop for a mortgage or take out a personal loan, you’ll need to thaw your credit freeze first.

The bottom line

Nearly all credit card fraud schemes, from phishing scams to card skimming, have the same end result: Someone else making fraudulent purchases on your credit card account. Knowing how to report credit card fraud and how to stop unauthorized credit card charges can help protect you from having to pay for someone else’s fraudulent charges. Taking steps to prevent credit card fraud can help protect you from having to deal with these headaches in the future. If you have reason to believe you’ve been a victim of identity theft or credit card fraud, take action immediately by reporting it to the Federal Trade Commission, your credit card issuer, and the credit bureaus. You’ll also want to file a police report. Here’s an overview of what to look for to spot credit card fraud or identity theft, and more information about what to do if it happens to you.

Types of credit card fraud

Even the most careful people fall victim to credit card fraud. Why? Credit card fraud can occur in many ways. Credit cards can be lost or stolen, or someone could steal your mail and gain your personally identifying information. Additionally, systems with credit card information could be hacked or broken into. Thieves also may use spyware or software that is used to scrape important information from your computer or from the systems of online retailers where you shop.

  • Credit and Debit Card Skimming: Skimming refers to stealing debit or credit card information via a special device — a skimmer — attached to an ATM, gas station pump, restaurant or store checkout terminal, or even a handheld credit card reader. Even though some experts recommend trying to spot a skimming device visually, the truth is, it’s not easy to do. Skimmers can be difficult, if not impossible, to detect. It’s important to protect yourself against skimming by paying special attention to ATMs. To help protect yourself from this kind of credit card fraud, use your own bank ATM instead of an ATM at a corner store, gas station or other location.
  • Email and Phone Phishing: Phishing refers to a scam where the perpetrators are trying to trick you into giving them your personal information, which they can then use to steal your money or even identity. In the case of a credit card fraud, it’s an attempt to gain access to your credit card information. Sometimes, those attempting fraudulent activity will send you a link that, when clicked, will install malicious keylogging software on your computer. Upon execution, the software will record all the login names and passwords you type and gain access to your personal financial information. To avoid or greatly reduce the risk of becoming a victim of phishing:
    • Don’t click on any links you’re not sure about and don’t email unencrypted personal financial information, even if you trust the recipient.
    • If you’re contacted by phone, rather than email, don’t divulge any sensitive information to anyone unless you have initiated the contact.
    • Never call the number or click on a link that suddenly pops up on your computer screen, especially if it claims that your computer has been infected with a virus.
    • Keep your antivirus and anti-malware programs updated.

Reporting credit card fraud

Knowing how to report credit card fraud is extremely important in resolving the issue. If you detect fraudulent charges, call your card issuer as soon as possible. The phone number can typically be found on the back of your credit card, or you can find it on the issuer’s website, and some, like Discover, may have toll-free numbers and agents available 24 hours a day. If, in addition to fraudulent charges, you believe your identity has been stolen, you should take a few more steps:

  • Contact the Credit Bureaus: You’ll want to contact each of the major credit bureaus (TransUnion, Experian and Equifax) to place a fraud alert on your credit reports, in which lenders must verify your identity when someone attempts to open a new account under your name. There is also a more intense option: placing a credit freeze on your reports. This makes it more difficult for thieves to open an account in your name by not allowing credit report inquiries unless you temporarily lift the freeze on your report when applying for a new account.
  • File a Police Report: It’s important to file an identity theft report with your local police precinct. Make sure you keep a copy of the report, which you may need to submit to creditors and others.

Invest in identity protection

As a Discover Cardmember, you have yet another option to help you protect your identity and personally identifiable information: Discover® Identity Theft Protection1 lets you know if your Social Security number and other personal info you add is on one of thousands of dark websites monitored, if accounts are opened or updated in your name at any of the thousands of financial institutions we monitor daily, if someone is using your SSN to create new identities at Experian and much more. All with 100 percent U.S.-based fraud resolution experts and up to $1 million in identity theft insurance for covered losses. Be sure to stay vigilant in protecting your personal information whenever possible, which can help mitigate the risks. Check out some ways to help keep your information safe. Your digital DNA is everywhere, so it’s smart to do something to protect it.


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