Close to half a million people fall victim to credit card fraud in the US every year. Learn what credit card fraud is and how you can guard against it.
- Credit card fraud is a common form of identity theft.
- Although you can recover the funds you lose to credit card fraud, there is a lot of short-term frustration involved.
- To guard against credit card fraud, protect your physical cards and your personal information.
Definition: Credit card fraud is the theft and criminal use of someone else’s identity, credentials, and credit standing to obtain illicit cash advances or purchase various goods without ever repaying the resulting debt.
This type of fraud is the credit card-based equivalent of stealing money right out of people’s pockets. Given the technologically sophisticated nature of credit card fraud, it takes victims longer to realize that they have been defrauded and take steps toward containing the financial damage.
Victims of credit card fraud may not incur permanent, long-term financial damage, but the short-term ramifications of this type of identity theft are considerable.
Credit card fraud costs you time and aggravation
The problem with credit card fraud, in particular, and identity theft, in general, is that in addition to your credit card information, criminals often gain access to your personal information such as your date of birth, name, address, SSN, etc. They can then use this information to take out loans in your name, claim tax refunds, and take control of your bank accounts. On top of it all, they can run up a massive credit card debt, ruining your credit score.
Types of Credit Card Fraud
On the frontlines of the fight against credit card fraud, credit card issuers invent better methods to protect their customers. Thieves keep coming up with their workarounds, however. Here are some common types of credit card fraud:
- The physical theft of your credit card is a classic way of gaining access to your money. Pickpockets can snatch your card from your pocket on a crowded bus, often together with your wallet. They can also break into your mailbox and grab your freshly issued card(s).
- Credit card cloning is still a popular method among fraudsters. The perpetrators place a device called a skimmer on an ATM at a gas station or some other location off the beaten path. Then, they proceed to lift your card number when you insert it. With that information, they can create a duplicate of your card and help themselves to your money.
- More sophisticated forms of identity theft can compromise information such as your name, address, phone number, SSN, etc. Such information allows criminals to take over your bank accounts, locking you out of them. By the time you realize what has happened, the damage is extensive and tedious to fix. Using this information, criminals can even open new credit cards in your name and max them out before you know what hit you.
- In possession of your personal information and credit card security code, thieves can shop online in your name without the need to present a physical credit card. This type of fraud is called “card not present fraud.”
The Ramifications of Credit Card Fraud
When fraudsters gain access to your credit card accounts, they get the chance to run up charges before you notice that there is a problem. Although you can dispute the charges and report the fraud to the authorities, eventually resolving the problem, while this happens, your credit score takes a hit.
Thieves aim to run up as many charges as they can, so your credit utilization rate suffers. High credit utilization negatively impacts your credit score.
When criminals max out your existing credit cards or open new ones and max those out, they have no intention of ever paying a bill. If you do not notice the wrongdoing in time, you will incur late payments. A bad credit history ruins your credit score.
Credit card fraud can ruin your credit score.
How can You Protect Yourself from Credit Card Fraud?
Keep your valuables well stashed away, especially when using public transportation or moving around in crowded locations. Criminals look for targets of opportunity. If you do not present an attractive target, they will likely ignore you. Never flash a credit card unless necessary.
Don’t carry your social security card or extra credit cards unless necessary. Leave them at home, locked away in a safe place.
Be wary of unsolicited phone calls, especially if they request personal information from you. Never give out your SSN, credit card number, or other such information over the phone unless you initiated the call to a known entity or you are certain that you are dealing with a trustworthy company.
Scammers may claim that they will offer you credit card help if you are in debt. Be aware that being in debt makes you even more vulnerable to such attempts.
Only accept credit card help from trustworthy entities that you have previously verified.
Companies that are in the business of credit card debt relief will not request credit card security information from you.
If you are a victim of credit card fraud, report it to law enforcement as soon as possible and alert your credit card issuer. Check your credit reports periodically and look for unusual inquiries. If you notice anything wrong, notify your creditor right away.
Review your credit card statements every month to catch out-of-place purchases and cash advances in time.
When Credit Card Debt Becomes a Problem
What if you are not a victim of credit card fraud, but you are still struggling to pay for legitimate charges you made on your credit card account? If you are in this situation, you are not alone. ClearOne Advantage can help you explore your credit card relief options. It just takes a simple phone call. Contact a ClearOne Certified Debt Specialist at 866-481-1597 and get a free savings estimate today.