If you discover you are a victim of credit card fraud, start the recovery process by notifying your credit card issuer, placing a fraud alert on your credit report, freezing your credit and contacting the three major credit bureaus. However, before taking these steps, you should determine if you are in fact a victim of credit card fraud.
Some telling signs that you are a victim of credit card fraud include unauthorized or unfamiliar transactions on your bank statements, small account charges, unauthorized changes on your credit report like an address change, and unexpected calls from collection agencies.
Continue reading to learn how credit card fraud happens and how to protect yourself from this type of scam.
How Does Credit Card Fraud Happen?
Here are some of the most common ways credit card fraud happens.
Public data breaches
Public data breaches are when data from a company is leaked and published online for anyone to see. Data breaches often happen due to cyber attacks such as ransomware, insider threats, malware and so on. When a company experiences a data breach, sensitive information, including customer and employee Personally Identifiable Information (PII) is exposed.
Some companies also store customer credit card information which, if exposed in a data breach, can lead to credit card fraud.
Lost or stolen credit card
Losing your credit card may happen and you might not even notice you’ve lost it before it’s too late. When you lose your credit card, anyone who gets a hold of it can use it for their own benefit, even if the card doesn’t belong to them. This may also happen if someone steals your wallet. Losing or having your credit card stolen are common ways credit card fraud happens.
Credit card skimming
Credit card skimming is a method used by threat actors to steal your credit card information. A credit card skimmer is a device that is attached to an actual card reader, such as those in grocery stores, ATMs and gas stations. These devices are designed to look exactly like card readers so a victim doesn’t suspect a thing. When an individual inserts or swipes their card, the skimmer scans the credit or debit card and sends the card information to the threat actor’s device via Bluetooth. The transaction goes through normally without it being flagged or rejected, so the victim doesn’t know that their card has been skimmed.
Once a threat actor has skimmed your credit card, they have your cardholder name, number and expiration date, which they can then use to commit credit card fraud.
Phishing is a cyber attack in which a threat actor uses social engineering tactics to convince a victim they are someone they’re not, so the victim feels obligated to send personal information. Oftentimes, phishing attacks use spoofed websites as a way to seem more legitimate.
For example, a threat actor could pretend to be your bank and prompt you to log in to your bank account to take certain actions. When you click on the link the threat actor has sent you through a phishing email or text, the link will take you to the spoofed site that looks legitimate. When you log in to your account, you’ll enter your credentials like you usually do, except this time the threat actor will know what your credentials are. They then use your credentials to log in to your legitimate account. Once a threat actor has gained access to your financial accounts, they can use their elevated access to commit credit card fraud.
In 2022, USPS workers were arrested for committing $1.3 million in credit card fraud from stealing mail. Mail theft is one of the many causes of credit card fraud and stolen identities. Often, when looking to steal your mail, threat actors will feel the envelopes to find mail that contains a card they can use for their own malicious purposes.
Steps To Take if You’re a Victim of Credit Card Fraud
Here are six steps to take if you’re a victim of credit card fraud.
1. Notify Your Credit Card Issuer
The first step to take after finding out you’re a victim of credit card fraud is to notify your credit card issuer. You can typically report fraud on the credit card issuer’s app or website. If you have the card with you, meaning it wasn’t stolen, you can call the number on the back of the card to report the fraudulent activity.
Once the issuer confirms that your card was fraudulently charged, the issuer will most likely cancel that card and send you a new one.
2. Place a Fraud Alert on Your Credit Report
The next step you should take after becoming aware of credit card fraud is placing a fraud alert on your credit report. You can do this by contacting any of the three major credit bureaus, Experian, TransUnion or Equifax. You only need to contact one of these credit bureaus to place a fraud alert on your credit report. Once you place the fraud alert with one of the bureaus, that credit bureau will alert the other two.
Placing a fraud alert on your credit report will make it harder for anyone to open a new credit card under your name. If someone does try to open a new credit account using your name, the business will have to verify your identity before they can issue it. Fraud alerts last one year, but you can renew an alert if you want or need to. Fraud alerts can be canceled by you at any time.
3. Freeze Your Credit
After placing a fraud alert on your credit report, you should also freeze your credit for extra protection. To freeze your credit, you’ll need to contact each of the three credit bureaus separately: Experian, TransUnion and Equifax. Unlike the fraud alert, freezing your credit with one bureau will not freeze it with the other two bureaus.
Freezing your credit will block access to your credit reports and prevent anyone from accessing them until you lift or “thaw” the freeze, which you can do at any time. To unfreeze your credit, you’ll just need to go through a verification process as a way to confirm your identity.
After taking the necessary steps, such as notifying your credit card issuer, placing a fraud alert and freezing your credit, contacting a credit bureau and creditor can help erase any damage that was caused.
For example, if you check your credit report and notice things such as late or missed payments and high credit utilization due to credit card fraud, contact the creditor who reported it to the bureau. Letting them know about your credit card fraud can help you clear it up. If the creditor won’t or cannot help, the next best thing is to dispute the information with the credit bureaus.
5. File a Report With the FTC and Police
The next step you should take is to report the credit card fraud to the Federal Trade Commission (FTC) by visiting www.identitytheft.gov. While the FTC will not investigate your individual report, they use the information you provide them with to support investigators and find perpetrators.
If you haven’t already done so, you should also report the credit card fraud to local law enforcement. Although this step isn’t necessary it can help the police put together patterns of credit card fraud in your neighborhood or city.
6. Quickly Change All Your Passwords
Once your credit is taken care of, you should change all of your passwords, starting with your online bank accounts, to ones that are strong and unique. You never know how much a threat actor may have gotten away with when committing credit card fraud, so securing your accounts is vital to staying protected.
If you have already been a victim of credit card fraud, you could also fall victim to other types of identity theft. It’s crucial to protect your online accounts before credit card fraud escalates to something further.
Changing all of your passwords can be a hassle to do on your own, but using a useful tool like a password manager will make it easier for you to change all of your passwords quickly.
How To Protect Yourself Against Credit Card Fraud
Here are some of the ways you can protect yourself against credit card fraud moving forward.
Secure your accounts
One of the most important things you need to do to protect yourself against credit card fraud is to secure your online accounts with strong passwords. If you reuse the same password across multiple accounts or don’t use password best practices when creating your passwords, your accounts are more vulnerable to being compromised. This is because they’re easier for threat actors to guess or crack.
Rather than relying on yourself to create your own passwords, it’s best to use a password generator to create them for you. If you’re afraid you won’t be able to remember all of your passwords, consider investing in a password manager.
Enable transaction notifications
Any debit or credit card you own should have transaction notifications enabled. With these notifications enabled, you’ll be notified in real time when a transaction is made using your cards. In the case that someone does steal your credit card and uses it, you’ll know right away and be able to take immediate action against the fraudulent transaction.
You can enable these notifications in your banking app, under the security settings. You can even customize what transaction amount you want to receive notifications for. We recommend setting the transaction notification amount to $1 so you receive a notification every time a transaction is made that is one dollar or more.
Opt for electronic mail
Receiving physical mail comes with its own risk. While stealing and reading other people’s mail is against the law, there are still many perpetrators who will do just that. To limit the risks of someone stealing your mail and using it to commit credit card fraud or steal your identity, opt for electronic mail instead. Rather than receiving your mail in person, you’ll receive it in your online account or through your email.
It’s especially important to opt for electronic mail for your bank statements and anything else that contains sensitive information. Most companies have a way for you to opt in to receive electronic mail in their settings. If you can’t find how to opt for electronic mail, it’s worth contacting the company to see if they offer it as an option.
As soon as you notice that one of your credit or debit cards is missing and you’ve confirmed that you didn’t just misplace it, make sure to immediately notify your credit card issuer. The sooner you report your lost or stolen card, the less damage a perpetrator can cause.
Don’t conduct online transactions in public places
While it’s sometimes necessary to conduct online transactions in public places, it’s best to avoid it whenever possible. This doesn’t mean when you’re going to pay for your coffee, but the cases where you want to purchase something from an online store. It can be even riskier to purchase things online when you’re on public WiFi. This is because anyone can log onto public WiFi and intercept the data being sent on it. This is also known as a Man-in-the-Middle (MITM) attack.
If you need to conduct an online transaction when you’re in public, stick to using your phone’s cellular data as it’s more secure than being on public WiFi.
Tap your card instead of inserting or sliding it
Many newer cards come with the ‘tap to pay’ feature. Tapping your card when performing a transaction prevents you from falling victim to card skimming, which steals your credit card information as you insert or swipe it.
Shred unwanted documents that contain sensitive information
Keeping documents that contain sensitive information can lead to the wrong person getting their hands on them. It can also end up leading to credit card fraud since many people keep cards they no longer use or bank statements they no longer need. If you no longer need a card or important documents, shred them. Doing this will keep your personal information protected.
Check your credit report regularly
Get into the habit of checking your credit report often to know when credit accounts are opened under your name without your authorization. This will also help you know when new inquiries are made without your authorization or if your address has been updated without your approval.
You can check your credit report for free at annualcreditreport.com, but you can only check it for free once per year. If you want to regularly check your credit report, credit scoring apps like Experian, Credit Karma or the ones that come with your bank can give you a good indication if your credit card numbers have been stolen or if you’re a victim of other types of identity theft since some alert you of new credit inquiries and show you your credit utilization ratio.
Stay Safe From Credit Card Fraud
Credit card fraud has the potential to lead to other types of identity theft if not dealt with properly. While credit card fraud can be damaging, there are steps you can take to mitigate the impact and prevent it from escalating any further.