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How to Prevent Credit Card Fraud

There are many ways credit card fraud can be attempted. The good news is that there are plenty of credit card fraud protection tips that can help protect your account.

By Carla Fried | American Express Credit Intel Freelance Contributor

7 Min Read | October 28, 2020 in Cards

 

At-A-Glance

Credit card fraud is the most common fraud complaint reported to the FTC, but there are ways you can protect yourself.

You can create your own credit card fraud prevention and detection strategy by using technology, carefully reviewing your statements and credit report, and keeping a keen eye out for common credit card fraud tactics.

Contact your credit card issuer ASAP if you suspect credit card fraud. You likely won’t have to pay for the charge.

Credit cards are becoming increasingly popular. According to the Federal Reserve, credit cards are used more than 40 billion times a year to make purchases and pay bills.1 That’s more than double the usage before the Great Recession. Alas, credit card fraud also is on the rise. 

 

Credit card fraud is the most common fraud complaint filed with the Federal Trade Commission (FTC). More than 270,000 credit card fraud complaints were registered in 2019, an increase of more than 70% from 2018 – and at mid-year, 2020 was tracking higher still.2 And not everyone takes the time to file a complaint. 

 

The good news is that there are plenty of steps you can take to add important layers of credit card fraud protection to your accounts.

 

Keeping Your Online Accounts Secure

Credit card scamsters have all sorts of methods for stealing credit card account info, even without stealing a credit card. One of those ways is by illegally accessing your account, but these tips can help protect you from that credit card fraud threat:

  • Create strong passwords. Using strong, unique passwords can help prevent credit card fraudsters from getting into your accounts. A strong password typically consists of eight or more characters that mix lowercase and capital letters, numbers, and symbols. And be sure to change it from time to time – some security experts recommend changing your passwords at least every three months.3
  • Use two-factor authentication. Two-factor authentication adds an extra layer of security to your account. If you log in to your account on a new device, two-factor authentication usually requires you to enter a one-time security code that’s sent to you by text, email, or phone call. This can help prevent someone from accessing your account even if they have your password.
  • Sign up for e-statements. Switching to e-statements can be a smart way to prevent credit card fraud because mailed paper statements can provide thieves with an opportunity to steal important personal information, whether by intercepting mail or taking paper documents from the trash or in a burglary. If you strongly prefer paper statements, consider putting them in a cross-cut paper shredder after you review.

 

Website Security Tips to Protect You from Fraud

It’s important to stay vigilant when shopping online and browsing the web. To protect against credit card fraud:

  • Avoid saving credit card info on websites (when possible). Sure, storing credit card info can make website or app purchases super convenient. But saved data also becomes susceptible to credit card fraud if the site is hacked.
  • Avoid making online credit card purchases when using public Wi-Fi. Wait until you can connect over a password-protected firewall. You can also consider using a virtual private network (VPN) at home. VPNs offer an additional layer of protection, making it doubly hard for hackers to obtain personal information.

 

Learn to Detect Phishing, Smishing, and Vishing Attempts

Criminals often use phishing, smishing, and vishing to commit credit card fraud. Learning how to detect these methods can help you protect against credit card fraud. For example:

  • Beware of suspicious emails. Criminals often use email to “phish” for credit card and other account information. They’ll often send fraudulent emails that urgently request you change your password or pay an overdue bill, but clicking the link and entering your information gives them free access to your credit card and account information.
  • Don’t click links in suspicious text messages. Fraudsters may try to obtain your private information through text messages, an act known as “smishing.” To protect yourself from credit card fraud, don’t click on suspicious texts – especially if it’s regarding a purchase you didn’t make or an account you don’t have.
  • Don’t share your credit card info when a “business” calls you directly. Criminals posing as representatives of legitimate businesses often call unsuspecting customers – they can even manipulate Caller ID to show the real business name. This technique is also known as “vishing.” Criminals might tell a false story about a billing issue and then ask for your credit card information to solve the problem. If you ever get a call like that, tell the caller you will contact the company directly about the problem and hang up. If the caller shares a call-back number, pass. Use the customer service number on the back of your card or head online to confirm the legitimate customer service number, then call the business directly and ask whether there is any billing issue.

 

Protect Yourself from Fraud When Making In-Person Purchases

While it’s important to protect yourself from credit card fraud online, it’s a good idea to stay vigilant in person, too. For example:

  • Keep an eye out for card “skimmers” at payment stations. One common type of credit card fraud happens when thieves attach hardware to a gas-pump payment card slot or other automated-payment kiosk. These “skimmers” collect credit card info when the card is inserted. You can check for skimmers by making sure the slot where you insert your card is flush with the machine. If it’s not, you might want to try another machine or pay in cash if possible.
  • When paying in-person, try to keep your card in sight. The chances of information being stolen can increase when the card is out of sight.

 

Keep a Close Eye on Your Personal Financial Information

Paying close attention to your financial information and accounts can help you detect credit card fraud if it were to happen. For example:

  • Review your monthly statement. Carefully reviewing your monthly statement is especially important if you only set up real-time alerts for transactions over a set dollar amount. When thieves steal card info, they commonly make a small charge to see whether it can get by you and the fraud-detection algorithms card issuers have working 24/7 in the background.
  • Monitor your credit report. If an identity thief tries to open a new credit card in your name, it will trigger a “hard inquiry” on your credit report. It’s a good idea to check your credit report for suspicious activity. You can also use a credit monitoring service that alerts you any time there is a change, including hard inquiries. To learn more, read “What is a Credit Report and Why is it Important?” and “What is Credit Monitoring and is it Effective?
  • Sign up for real-time alerts. You can log into your credit card account to opt into email or text alerts that send you a notification any time your card is used. Another approach: You can have alerts sent any time a transaction exceeds a set dollar amount.

 

What to Do if You Suspect Credit Card Fraud

In the event you find a credit card transaction you don’t recognize or a credit monitoring service flags suspicious activity, it’s important to take steps to promptly shut down any illegal activity and prevent further damage. Here are some things you can do:

  • Contact your credit card issuer ASAP. Log in to your online account to start a chat or call the phone number on the back of your card. Fraud specialists will help you undo the damage and prevent more problems. Most major card issuers will not hold you liable for the fraudulent charge, and you can request to receive a replacement card with a new number and a 3- or 4-digit security code. You’ll typically get your new card in the mail within 7 to 10 days, and although it’ll be a new card your account is not formally cancelled. All your transaction history will continue to stay on record with the credit bureau. That’s worth knowing because the average age of your credit accounts is a factor in calculating your credit score.
  • File an identity theft report with the federal government. At the identitytheft.gov website you can file a report and learn what steps to take to further protect yourself from credit card fraud and identity theft.
  • Consider placing a freeze on your credit reports. A credit report security freeze can be an effective way to protect yourself from credit card fraud. A freeze prevents businesses from checking your credit reports, making it unlikely they’ll approve financial applications. Keep in mind that when you are applying for new credit, a loan, or signing up for utility service, you’ll need to temporarily unfreeze your credit reports. It’s a small step that can give a large dose of peace of mind.

 

The Takeaway

There are many ways credit card info can be stolen, but there are plenty of credit card fraud prevention tips that, when followed, can reduce the chances of fraud. And even if it does happen, your credit card company may be able to help reverse the damages and prevent more problems from happening.

Carla Fried

Carla Fried is a freelance journalist who has spent her entire career specializing in personal finance. Her work has appeared in The New York Times, Money, CNBC.com, and Consumer Reports, among many other media outlets.

 

All Credit Intel content is written by freelance authors and commissioned and paid for by American Express. 

The material made available for you on this website, Credit Intel, is for informational purposes only and is not intended to provide legal, tax or financial advice. If you have questions, please consult your own professional legal, tax and financial advisors.