Identity theft and fraud protection for your finances, personal info, and devices.
What Is Credit Card Fraud? Is It Really That Dangerous?
Credit card fraud is a form of identity theft where someone uses your credit card details to make unauthorized purchases or opens new credit accounts in your name.
Since the start of the pandemic, credit card fraud has increased nearly 50% according to the Federal Trade Commission (FTC) [*].
Credit card fraud generally falls under two categories.
- Application fraud is when a scammer steals your identity and uses it to open new credit cards in your name or commit loan fraud.
- Credit card account takeovers happen when someone gets access to your current credit card details without your knowledge or fraudulently changes your address and orders a new card.
The good news is that the Fair Credit Billing Act (FCBA) limits your liability to credit card companies to $50–$500 in the event of credit card fraud. Unfortunately, fraudulent charges aren’t the only thing to worry about if someone has access to your credit card numbers.
Fraud can leave you with a ton of debt to your name and a damaged credit score. Plus, you'll be stuck with the headache of trying to prove you were the victim of identity theft and didn’t make those purchases.
Prevention is the best protection when it comes to credit card fraud. So how do criminals try to get access to your account details?
The 9 Most Common Types of Credit Card Fraud in 2022
1. Scammers buy your credit card account details on the Dark Web
Due to the number of data breaches in recent years, there’s a good chance that scammers can get access to your credit card details on the Dark Web.
Account details for credit cards with a limit up to $1,000 cost just $150 (and $240 for cards with a limit up to $5,000). While online bank account details go for just $40, according to the Dark Web Price Index.
2. You accidentally give out your details in a phishing email, text, or call
Phishing is when scammers send emails, texts (called “smishing”), or call you pretending to be from a financial institution, an online account like Netflix, law enforcement, or even the IRS.
Then, they either ask you to “confirm” your financial information or click on a link that sends you to a fake site that captures your information or downloads malware onto your device.
Phishing messages almost always try to force you to act, either through threats or time-limited offers. If something feels off about an interaction, hang up or delete the message and contact the company directly.
3. Your wallet is lost or stolen (aka physical card fraud)
A stolen wallet can lead to all sorts of fraud.
With access to your ID and stolen credit card numbers, fraudsters can steal your identity and use it to commit loan fraud or bank fraud. Repairing this situation can be frustrating, expensive, and time-consuming.
4. Fraudsters use “skimmers” and “shimmers” to steal your details at ATMs
Scammers install small devices into public ATMs in order to “skim” your account details. “Skimmers” work by replacing the magnetic strip reader on an ATM, while “shimmers” work for chip readers.
If your credit card has an RFID chip, its information could be stolen by someone with a skimming device standing within close proximity to you.
An even simpler form of this scam is when fraudsters “shoulder surf” your credit card information in public. For example, they might write down your card details as you’re using it at a store or watch you enter your information into an online shopping site.
5. An identity thief opens new credit card accounts in your name
Credit card fraud is identity theft. But in some cases, criminals will skip using your current card details and instead open new cards in your name.
This is especially dangerous if they also use a change-of-address scam to divert your mail. Not only will they have a card with your name on it, but you won’t even get the bill.
Zoom out: Sign up for a credit monitoring service that alerts you of any suspicious activity. For example, Aura monitors your credit card details, bank accounts, credit score, SSN, online accounts, and more and lets you know if someone is using them without your permission.
6. Someone with access to your card uses it without your permission
There’s an opportunity for fraud anytime your credit card is out in public.
An unscrupulous waiter could take a picture of your card while settling your bill at a restaurant. Or a store clerk could write down your details while you’re not looking. Even leaving your receipt on the counter following a credit transaction could leave a thief with enough information to access your line of credit.
7. Hackers steal your credit card information from online sellers
Credit card fraud can even happen without your knowledge. Some hackers target e-commerce websites and exploit vulnerabilities to steal massive lists of credit card numbers and information. If you’ve bought something from one of these stores, they have your info.
8. Your financial and personal information is stolen in the mail
Scammers will dig through your trash or steal your mail in order to get personally identifiable information (PII). If they find credit card statements or pre-approved offers, they can use those to apply for new, fraudulent cards in your name. Or worse, commit identity fraud.
9. “Friendly” fraud from family members or acquaintances
“Friendly” fraud is a growing problem in the U.S. This is when family members or acquaintances use your credit card without your permission or knowledge. Many financial companies are moving to make “friendly” fraud an official fraud category [*].
How To Prevent Credit Card Fraud
When it comes down to it, there’s an opportunity for your credit card information to be exposed every time you swipe, tap, or use it.
And with every American walking around with an average of four credit cards in their wallet, it’s almost inevitable that most credit or debit card users will have to deal with fraud at some point in their life [*].
Here are the best tips to prevent identity theft and to keep your card information where it belongs: safely in your wallet.
Review your monthly statements as soon as you get them
To protect yourself from credit card fraud (and to limit your liability), review your monthly statements for suspicious activity as soon as you get them.
Verify that all charges are accurate. If you’re unsure of a transaction, try Googling the name of the merchant.
If you see any charges that appear inaccurate or fraudulent — no matter how small — report them. Fraudsters pulling off a carding scam will make small charges to check the validity of your card details. If it works, larger fraudulent charges will follow.
Sign up for credit monitoring and fraud alerts
Checking your monthly statements and credit score is a lot of work and it still often won’t show you the signs of fraud until it’s too late. A credit and fraud monitoring service works in real-time to check transactions and make sure no one’s using your information without your permission.
Here’s what you get with Identity Guard:
- Credit monitoring: We monitor all three credit bureaus for changes to your credit report.
- Credit scores & reports: Keep track of your credit history with monthly credit updates and annual reports from the major credit bureaus.
- Financial transaction monitoring: Link your bank accounts and set alerts on spending activity to help detect the warning signs of fraud.
- Debit and credit card monitoring: We’ll alert you to any signs of fraud or fraudulent transactions.
- Investment account monitoring: Keep tabs on your 401k and other investment accounts for signs of fraud.
- Bank account monitoring: Get alerted if someone tries to add more account holders or remove your name from an existing bank account.
- $1 Million identity theft insurance: Every Identity Guard plan comes with an insurance policy that covers eligible losses due to identity theft.
Beware of phishing scams over email, text, or phone
For any emails from your bank, click or hover over the “from” name and double check it’s coming from an official email address. For text messages, Google the phone number to see if it’s a scam.
If someone calls claiming to be a representative, ask for a reference number and hang up. Then, call them back on their official phone number.
Save your financial institution’s contact information
Scammers can be especially convincing over email or text messages where they can mask their true identity and make it look like they’re actually from your bank. But if you save your financial institution’s phone number and official email address, you should be able to quickly see if they’re contacting you through the proper channels.
Many banks will also use a “shortcode” for text communication. These are usually five-digital numbers that come directly from your financial institution. Save these in your phone.
Check that online shopping sites are secure (i.e., “https://”)
Scammers use a type of emerging cyber threat called “pharming” to set up fake websites to steal your credit card information.
Make sure that the site you’re visiting is secure. This means it uses “https://”not “http://”. You should also look for a small padlock beside the URL.
Be cautious when using your credit card in public — even on your devices
Beware of using your card in public places – both for shopping in person and online.
When entering your card details, physically block out other people from seeing your account numbers or PIN. And don’t use public Wi-Fi for financial transactions as scammers can intercept it and steal your information.
If you need to do any online purchases in public, use your phone’s hotspot instead.
Keep your credit cards physically secure and report theft or loss quickly
Have a regular slot of each card in your wallet, so that you would quickly notice if it was missing. Avoid keeping your card in pockets or money clips.
Whenever possible, carry your wallet in a zipper purse or pocket, doing whatever you can to make sure that it would be difficult to accidentally drop it. Subsequently, this also makes your wallet difficult to steal.
Use encrypted digital payment options (Apple or Android Pay)
Digital payment options or even photos of your credit card on your phone are convenient. But if your phone is stolen or accessed, it gives a criminal all your most sensitive information. Instead, use encrypted digital payment options like Apple or Android Pay. If possible, connect these to biometric security options like fingerprints or facial recognition.
When you add your credit or debit card to a digital wallet such as Apple Pay, your card information is encrypted and sent to Apple’s secure servers.
Each time you use your card through Apple Pay, Apple generates a unique token to complete the transaction. This token is different from your card number, meaning that if someone were to decrypt the transmitted payment information, it wouldn’t provide them any value.
Go paperless and shred documents that contain your account information
Dumpster diving is a popular way for fraudsters to gather information about their victims. If you’re recycling documents, shred anything that contains financial information. You might even want to put some of the shredded documents in the trash to make it difficult to piece back together.
This goes for documents that show only the last 4 digits of your card. Even those digits can be used by a thief to access more of your information.
For added security, go paperless and receive your bills and documents online instead.
Don’t provide your credit card information to anyone over the phone
If you receive a voicemail or a phone call from someone that claims to need your credit card information for any reason, hang up. It’s more than likely a scam. After hanging up, call the customer service number on the back of your card and ask the representative what, if anything, is going on.
Also, beware of giving out your card information over the phone in public. Scammers can listen in and steal your account details.
Before swiping your card anywhere, check for card skimmers
Look for anything on the credit card reader that seems to be loose, crooked, or out of place. Give that part a tug or a push if you’re suspicious something might be wrong. You can also avoid card skimmers all together by using smartphone mobile payment (such as Apple or Android Pay).
Use a credit card over a debit card whenever you can
Even though it might seem like using your credit card can be risky, it’s still safer than only using your debit card.
Federal Law limits your liability to only $50 in fraudulent charges if you report the credit card fraud within two days of it occurring. (If you take longer than two days, you could be liable for $500 in fraudulent charges).
Some cards even offer a zero liability policy. So, there’s a good chance you won’t have to pay for anything in the case of fraud or theft.
What To Do if You See Fraudulent Charges on Your Credit Card
1. Call your credit company to report the fraud
Call your credit card company as soon as you notice fraudulent purchases on your card.
Call the number on the back of your credit card and ask to speak to your credit card’s fraud department. This starts the fraud reporting process and also limits your liability for any charges.
They’ll help you freeze your card so that no more fraudulent transactions can be made. Then, they’ll walk you through the process of identifying which charges are fraudulent and need to be removed. They should also be able to help get a new card on its way to you.
Here are the numbers you can call for some of the major credit card issuers in the United States if you suspect fraud.
- Visa: 1-800-847-2911
- MasterCard: 1-800-627–8372 (1-800-MASTERCARD)
- Chase: 1-800-432-3117
- Capital One: 1-800-227-4825 (1-800-CAPITAL)
- Citibank: 1-800-950-5114
- Bank of America: 1-800-732-9194
- Discover: 1-800-347-2683 (1-800-DISCOVER)
- American Express: 1-800-528-4800
⛳️ Related: Stolen Driver’s License? Stay Calm! Here’s What To Do →
2. Freeze your credit with all 3 credit bureaus
You can freeze and unfreeze your credit with Equifax, Experian, and TransUnion via their websites for no cost.
If the fraudster has more information about you than your credit card number — such as your Social Security number — taking this step will limit the additional damage they can do.
- To place a credit freeze with Equifax, click here or call 1-800-349-9960
- To place a credit freeze with Experian, click here or call 1-888-397-3742 (1-888-EXPERIAN)
- To place a credit freeze with TransUnion, click here or call 1-888-909-8872
3. Change all your passwords and set up 2FA and a password manager
While you’re freezing your credit on the credit bureau’s websites, take a minute to change your passwords and update any existing PINs. This is a situation where you can’t be too careful.
Record any account usernames, passwords, and PINs in a secure location, such as with a password manager. Use unique and complex passwords, and avoid personal numbers, such as your birthday or the last four digits of your Social Security number, as PINs.
For added security, set up two-factor or multi-factor authentication (2FA or MFA). This is a security measure that requires a one-time code along with your username and password. But skip SMS for 2FA as it can be compromised. Instead, use an authenticator app like Google or Authy.
4. Check your online shopping accounts for fraud
Once you’ve checked your credit statement and contacted impacted companies, look at the online shopping accounts you use the most (Amazon, Walmart, Target, etc.).
If you identify any transactions that weren’t made by you, contact the retailer right away.
5. Monitor your accounts and online identity
Once thieves have access to your sensitive information, they’ll continue to strike. So you need to be diligent in protecting your new accounts. Consider signing up for automatic credit monitoring, which will track your accounts in near-real time and alert you of suspicious activity.
6. File an identity theft report
Credit card fraud is often a warning sign of identity theft.
To protect yourself from further fraud, it’s a good idea to file an official identity theft report with the Federal Trade Commission (FTC) at IdentityTheft.gov.
7. Get identity theft protection
With Aura, you’re covered with a $1 million insurance policy for eligible damages resulting from identity theft. Plus, you get access to an experienced, 24/7 US-based customer support team to walk you through securing your identity and protecting yourself from fraud.
Stolen Wallet? Missing Credit Card? Do This
- Make a list of everything inside your wallet
- Call your bank
- Call your credit card company
- Freeze your credit with all three credit bureaus
- File a police report
- Contact the DMV and SSA
- Get identity theft protection
1. Make a list of everything inside your wallet
Lost wallets are rarely returned. If your wallet has been lost or stolen, you can safely assume that the information inside of it has been compromised and needs to be locked down and replaced.
Start by making a big list of everything you know was in your wallet: cards, ID, checks, cash, notes, passwords written on scraps of paper.
Then, prioritize each piece by how sensitive it is. For example, start with your credit or debit card and take action by contacting the agency or institution responsible and alerting them of the theft.
2. Call your bank
Report your lost debit card immediately. If you wait more than 60 days to report card theft, you may be held responsible for unauthorized purchases.
Your bank will cancel the card and issue you a new one with a new number. In the case of bank fraud, you may need to cancel your bank account and transfer everything to a new one.
3. Call your credit card company
Repeat the same steps as you did with your bank with your credit card company. Report the theft, any fraudulent purchases, and cancel the card. Your card company will investigate and send you a new card.
Again, do this as quickly as possible. Cardholders are only covered by the Fair Credit Billing Act if they report the fraud within two days.
4. Freeze your credit with all 3 credit bureaus
Once you’ve taken protective action on all of the items in your wallet, take preventative action against damage to your credit.
Contact Equifax, Experian, and TransUnion to freeze your credit file for free (or use Aura to lock your credit file). Doing so will prevent anyone from taking the contents of your wallet and using it to open new lines of credit.
5. File a police report
Contact local law enforcement and file a police report for the missing or lost wallet. A police report is a critical step in protecting yourself from further identity theft-related fraud.
6. Contact the DMV and SSA
Next, you’ll want to cancel any other sensitive cards — such as your driver’s license, ID, and Social Security card. This is another critical step as your identity can be stolen if someone has your ID.
Each state requires different proof of identity. Before you apply for a new license, check your local DMV’s website for the documents you’ll need to supply.
If you made the mistake of carrying your Social Security card in your wallet, you’ll need to contact the Social Security Administration (SSA). They’ll send you a replacement card, but usually won’t change your number unless you can prove someone is using it illegally.
If you’re worried, consider signing up for Social Security number monitoring.
Pro tip: Leave your Social Security card at home. Your SSN is a golden ticket for identity thieves and should be kept as secure as possible. (Plus, it's not always possible to change your Social Security number, even after identity theft.)
7. Get identity theft protection
Criminals can cause all sorts of damage to you with a stolen wallet, from opening new credit cards to committing crimes under your name.
Consider signing up for an identity theft protection service to ensure thieves don’t continue to use your identity for criminal activity and fraud.
IdentityGuard and Aura are two of the highest-reviewed identity theft protection services available. But do your own research. Check reviews and read testimonials before you trust any company with your sensitive data.