Cybercrime is a growing problem in the U.S., and there seem to be new scams you need to know about every day. But one problem everyone must be on guard for is credit card fraud.
Credit card fraud can be difficult to spot and even harder to resolve. The best things you can do are to watch out for the warning signs, monitor your finances and act quickly to address the theft once it occurs.
[Read: The Very Best Ways to Prevent Credit Card Fraud.]
What Is Credit Card Fraud?
Credit card fraud happens when your card information is stolen to make fraudulent purchases. According to the Federal Trade Commission, credit card fraud is the most common type of identity theft.
Credit card fraud can be hard to detect because it can take many different forms. Here are the main types of credit card fraud you should know about.
— Account takeover. Account takeover happens when a criminal gains access to your account and changes your password, PIN and mailing address. Once this happens, the criminal has total control of your account and you’re locked out.
— Cloned cards. Criminals often place devices known as “skimmers” on top of card readers at gas stations and other terminals. After you swipe your card, they have your credit card number and can create a duplicate.
— Card-not-present theft. In card-not-present theft, criminals access your card information through a phishing scheme or some other online scam. They can make fraudulent purchases online once they have your name, card number and security code.
7 Common Signs of Credit Card Fraud
If you’re a victim of credit card fraud, you may incur steep charges and damage to your credit report. But if you understand the seven common signs of credit card fraud, you can act quickly to resolve the situation.
1. Strange transactions
According to Kendall Meade, a certified financial planner at SoFi, strange transactions on your monthly statement are one of the biggest signs of credit card fraud. If you notice unfamiliar transactions on your account, contact your credit card company immediately to cancel your card.
Unauthorized charges can happen at any time, which is why Meade advises staying vigilant. “It is very important to check your statements for charges and make sure to report any charges you didn’t make,” she says.
Many credit card companies make this easy by sending push alerts that notify you of new charges. “This can help you to stop fraud right away because you see it then instead of at the end of the month when you review your statement,” Meade says.
2. Suspicious merchants
Census Bureau data shows that e-commerce transactions account for more than 15% of all sales. With more people shopping online, it’s important to pay attention to the company names showing up on your credit card statement. If you see stores listed that you have never heard of, this could be a sign of credit card fraud.
You can protect yourself by only making purchases from trusted websites or vendors. According to Darius Kingsley, head of consumer business practices at Chase Bank, scammers can extract your credit card information if you’re using an unsecured website or public Wi-Fi. “It’s also important to be cautious about buying gift cards with credit cards from third-party sites or cards that have already expired.”
3. Small charges on your account
Meade says that after stealing your credit card information, scammers often will make a series of small charges on your account to test whether it will work. These charges may not raise any red flags with your credit card company. The thieves likely will move onto larger purchases once the smaller charges clear your account.
If you notice these small transactions on your credit card statement, contact your bank immediately. The bank will conduct an investigation and, if it concludes you were the victim of fraud, will reimburse you for the unauthorized charges.
4. Payments from other locations
Odds are, you make purchases within a close radius of where you live, so you should be concerned about payments from unknown locations. “Be sure to double-check purchases in another place that you have not been, as it can be an indicator of a fraudulent purchase,” says Christopher Stroup, certified financial planner and founder of Silicon Beach Financial.
5. You have less credit available
Let’s say you have one card open with $5,000 in available credit. If your available credit suddenly drops to $3,500, that is a potential sign of credit card fraud. Stroup says a sudden drop in your available credit is usually the result of pending purchases. “You will want to investigate immediately to understand what caused the reduction in your credit line,” Stroup says.
[Read: Best Credit Cards.]
6. New accounts are opened in your name
If you suddenly receive a bill from a new lender or are contacted by a collection agency about a debt you aren’t responsible for, you may be a victim of fraud. Scammers can steal your personal information to open new accounts in your name.
Meade advises checking your credit report at least once a year to ensure all the information is accurate.
To stop additional accounts from being opened in your name, you can place a freeze on your credit report. You can also sign up for digital tools that will alert you to changes in your credit score.
7. You’re denied new credit
If you don’t understand why you were denied when you tried to open a new credit card, this could be a sign someone else has damaged your credit score. Credit card companies will not hold you liable for charges you didn’t make, but if the fraud goes undetected for a long time, this will result in damage to your credit score.
That’s why it’s so important to keep tabs on your credit report and watch out for signs of fraud. At the very least, you should request a copy of your credit report from the three major credit bureaus once a year. If you spot any inaccurate charges, you can request to have them removed from your credit report.
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7 Signs of Credit Card Fraud originally appeared on usnews.com
Update 11/19/24: This story was previously published at an earlier date and has been updated with new information.
