Credit Card Fraud: A Complete Guide

How it happens. What to do. How to prevent it.

Credit card fraud is no laughing matter. When you find out you've been a victim of credit card theft, you're likely to have a range of emotions and have a lot of questions. Confusion: How did my credit card details end up in the wrong hands? Embarrassment: My credit card was just declined in front of everybody. Anger: How could they do such a thing to me? Worry: What if they've gotten into my other accounts? Fear: What if I can't recover my funds? These feelings are common, and you are not alone. More than 47% of Americans have been victims of credit card fraud in the last five years [1]. We're here to help you..

How Credit Card Fraud Happens

Unless you were notified about a data breach involving your card information, you’re likely wondering HOW? How did my credit or debit card number land in the wrong hands? This can happen in any number of ways. Some of these ways are avoidable, while others are not.

Card Skimming

One of the most popular ways for hackers to steal card details is by card skimming. When your card is swiped, the information on your card is either transmitted to the card thief through bluetooth or saved in the skimmer for retrieval later. It may be difficult to see a skimmer, although it is possible in certain situations.

Skimmers are most often seen in low-traffic environments, like ATMs and gas stations. Thieves choose low-traffic areas over high-traffic areas to minimize the chances of being spotted installing the skimmer. Low-cost skimmers will be clunky and noticeable, while higher-cost skimmers will sit snugly on the card reader and be much more difficult to detect. Grab the card reader and tug it before you swipe your card at an ATM or gas station. Do not insert your card if it sounds loose or shows any signs of tampering, and notify an employee of your findings.. Consider prepaying with your card inside the gas station or paying with cash instead to avoid run ins with card skimmers in low-traffic areas.

Skimming has also been known to take place in restaurants and bars. Since most transactions are made out of sight, it's simple for a disgruntled staff member to set up their own skimmer and commit the crime. This can be avoided by paying cash in restaurants and bars, or by periodically checking the accounts for evidence of unauthorized charges.

Scam Phone Calls

Scam phone calls are another popular method of stealing card information. The Federal Trade Commission reports that phone calls are the number one way people reported being contacted by scammers in 2019 [2]. Technology makes it simple for a caller to spoof the phone number that appears on your caller id. Anyone can easily make a phone call and choose what company name or phone number they want the caller to see, which makes these tricky to spot. There are two main ways that card thieves obtain card information through scam phone calls.

If you’ve ever received a phone call from a company trying to sell you something, there’s a possibility that it was a scam from a card thief. That’s not to say legitimate companies don’t make sales this way. They do. Because legitimate companies made phone sales a normal part of life, card thieves can pretend to be anyone associated with any company to trick you into providing them with your card information in exchange or a service or product that you’ll never actually see.

The other big tactic card thieves use to steal card information is by posing with companies you do business with. Most areas are assigned to a specific electric, cable, or gas provider and phone numbers are owned by their respective service providers, so it’s no secret to card thieves that you do business with the company. They might alert you of a problem with your payment, threaten a shut-off, offer an add-on to your plan at a discount, or use any number of means to convince you to provide your card information.

No matter the approach a card thief may use, the best way to avoid becoming victim to credit card fraud as a result of a scam phone call is to never provide your card information to someone who called you first. This applies for all callers including sales, insurance companies, utility servicers, debt collectors, and more. If you suspect the caller is legitimate, hang up and call the company back using the customer service phone number provided on the company website, not the phone number provided by the unsolicited caller.

Phishing Scams

While most of us know the Nigerian Prince transferring our inheritance for a fee is an obvious phishing scam attempt, email scammers are becoming increasingly believable. They’re becoming so real, in fact, that they’re even fooling email spam filters and that’s a pretty big deal.

Phishing scams begin when a scammer initiates contact with a target. That contact may come by phone, text, email, popup, or any other means. They’ll typically provide an alert that needs to be acted upon immediately, such as a security alert or a problem with billing. When the target visits the site provided by the scammer to correct the problem, they’re asked to enter their billing information to verify their identity or update their account. When they do, it sends the information straight to the card thief.

These websites often look so real that they’re indistinguishable from the real site. Many of them even redirect victims back to the home page for the legitimate website after the completion of the scam, leaving victims none the wiser that anything out of the ordinary took place.

Phishing scams can be difficult to detect. Make sure to always check the URL of a website before entering sensitive information to make sure it matches the official website and never share personal information by email. To detect phishing websites, make sure to use browser protection, which will block phishing websites so you never have a chance to fall victim to the scam.

Fake Online Stores

E-commerce is booming and new online stores appear almost daily. We’re all for supporting the new guy, but the problem with so many new online stores is that it’s tough to determine which are real and which are fronts for card thieves. Newer stores may not have online reviews to read before placing an order, which makes it tough to determine their legitimacy.

To avoid risks associated with fake online stores, stick with trusted and well-known retailers. If you’re considering a purchase from a lesser-known retailer, see if they have a storefront on Amazon or search for the name of the company, along with the word “reviews” to see if anyone else has shared about their positive or negative experience and don’t rely only on reviews posted on the website in question. You can also use https://www.whois.net/ to see what date the website was created and who owns the website. If the site is too new or has no online reviews, that’s a major red flag to run the other way.

Malware

Card thieves may receive your card information from malware installed on your computer or on a public computer you may have used. Not all malware causes obvious signs of infection so you may not know if your computer or another computer you’ve used poses a threat to your privacy. Simply visiting a legitimate website with low security, clicking on an attachment, or clicking on a link shared by a friend on Facebook can result in a malware infection.

Keyloggers are one of many types of malware that can send your information to card thieves. They can steal passwords, take screenshots, record websites, and see every key on your keyboard that you’ve pressed, including your card number.

Once installed, malware is very difficult to remove, even for traditional antivirus software. The best way to avoid malware infections is to focus on prevention by installing browser protection before your computer becomes infected.

Data Breaches

Data breaches have been making headlines for years and they’re becoming more common as more and more companies move to cloud-based storage solutions. Unfortunately, not all data breaches are detected and announced immediately. Some are never announced publicly at all, even though your information is available in plain text on the dark web for hackers to use as they please.

Unfortunately, it isn’t possible to prevent a data breach entirely. All companies and organizations you associate with, including your utility companies, medical offices, financial institutions, and your government are at risk of experiencing a data breach exposing your personal information. To minimize the possibility of becoming a victim of a data breach, only provide information that is completely necessary when dealing with any organization and don’t be afraid to ask why they request certain information to determine if it’s truly necessary to share.

Most importantly, make sure that you use an account monitoring service so that you’re made aware of data breaches involving your information immediately, even those that haven’t made news headlines just yet. This way, you can take action to secure your account and minimize the effects the breach has on your finances, reputation, and identity.

What To Do When You Find a Fraudulent Charge

When you notice a fraudulent charge on your card statement, it’s important to take action immediately to reduce the impact. Not only do many financial institutions have limitations on the amount of time you have to report fraud without personal liability, but it’s also common for card thieves to test the validity of a card by placing small charges first before moving on to larger transactions. The moment you notice a fraudulent transaction on an account, here are the steps you need to take:

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Report Unauthorized Charges to Your Bank

Do this immediately. Don’t delay. When you do this, your bank will be able to tell if the charge originated from your card or the account. If it was the card, the compromised card will be cancelled and a new one with a new number will be issued to you. If the account was compromised, the account will be closed and they’ll help you open a new account.

Some credit card issuers offer zero-liability for fraudulent transactions, but this only applies when unauthorized charges are reported within a specific timeframe. If your card issuer does not offer zero-liability for fraudulent purchases, in the United states, you may be liable for up to $50 if you report the fraud within 2 days of the charge, up to $500 if reported within 60 days, or the full amount if reported outside of that 60 day window of time. This, along with the possibility of additional fraudulent charges are why it is so important to act immediately.

File a Fraud Report

Depending on the severity of the situation and how many unauthorized charges were placed, you may consider filing a fraud report or a police report. Your local police department is one source, but by filing a report with the Federal Trade Commission (FTC) at IdentityTheft.gov, the FTC will help you by creating a personal recovery plan and providing you with pre-filled letters and an official report you can send to your bank or affected merchants to make the recovery process easier. By filing a fraud report, you also increase the chances that the card thief will be caught and unable to commit fraud against others.

Dispute Unauthorized Charges

This step is usually initiated when you call your bank to let them know of the fraud. They have 10 days to investigate the fraudulent charges and let you know of their findings. In most cases, they’ll mail a letter to you outlining the charges you’ve disputed and ask for any further information that may be relevant to the case, especially in cases where the physical card was swiped during the fraudulent transaction.

Update Your Automatic Billers

If you subscribe to any services or have bills automatically deducted from the affected account, when your new card arrives, make sure to update your billing information. This avoids any accidental shut offs or surprises when you use a paid service linked to the affected account.

Monitor Your Online Accounts

By simply being a victim of card fraud, your chances of being a victim again are magnified. Moving forward, you should always check your statements regularly. Enroll in online banking if you haven’t done so already, so that you can easily see a list of all transactions made on your accounts.

You should also use a data breach monitoring service so that you’ll receive an alert any time one of your accounts is involved in a data breach. This will allow you to take action before a fraudulent charge takes place. It’s much easier to prevent fraudulent charges than it is to fight them after they’ve already occurred.

How Guardio Prevents Card Fraud

Credit card fraud is a huge concern and has affected many people. By using browser protection and account monitoring, you can reduce the likelihood of your card information falling into the wrong hands. Guardio offers both of these features. Here are the ways that Guardio can help you prevent card fraud:

1. By blocking phishing websites that can trick you into accidentally providing your sensitive information to card thieves.
2. By alerting you when a website you visit is too new to be trusted.
3. Blocking websites containing malicious code and other scams to protect your computer from malware.
4. By neutralizing malicious browser extensions that may spy on your browsing sessions and alter your browser settings.
5. By scouring the dark web for signs that your accounts have been involved in a data breach so you can take action before fraudulent charges take place.

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Sources

https://www.creditdonkey.com/credit-card-fraud-statistics.htmlhttps://www.consumer.ftc.gov/blog/2020/01/top-frauds-2019