What constitutes credit card fraud? How does it happen? Most importantly, how do you prevent it from happening to you?

The answers to all of these important questions and more can help us to understand what fraud is all about.

Doing so can also leave you as a more informed credit card user and account holder.

You’ll make smarter, more confident choices when you know what fraud is all about and how it works.

What is credit card fraud?

Credit card fraud is when purchases or transactions are made on your account without your approval or knowledge.

Fraud can take place in many forms. Here are some of the most common:

  • A stolen credit card number that’s used in-person
  • Stolen card numbers used online
  • A family member posing to use a loved one’s personal information (Yes, it’s still fraud, even if you know the offender!)
  • Hacking into a credit card account online and changing the data. This is considered fraud whether purchases or made, or someone is simply locked out of their account.

The onset of credit card fraud

Credit card fraud has essentially been taking place for as long as credit cards have been in existence themselves.

Now, with faster transaction times, scammers have an entire new list of tricks up their sleeve.

Back in the day, a scammer could snatch a card and pretend to be a cardholder, long gone before the actual transaction was made.

This, of course, made such fraudsters hard to catch.

Credit card fraud checks and balances

Today, with security cameras, the call for pins, and more, it’s more difficult for a thief to use a credit card that is not their own. However, there are also far more of them in existence.

We rely more on credit cards than we ever have in the past, and with it comes new waves of people trying to beat the system.

This is why we deal with new problems for credit card fraud. The ability to shop online opens us up to new data risks.

Online purchases are not as frequently protected by the need to show IDs or face-to-face transactions. In those cases, anyone with the correct card info could make an online purchase. They can charge your card fraudulently from the comfort of their own home.

What’s even scarier is that a scammer may not even have to get their hands on your card. Hackers can break into online databases and steal your card info directly from online.

That’s why it’s become so much more important to use secure web programs. Credit card companies themselves have authentications and extremely secure websites.

There’s still more to it. Scammers can get your card info in more creative ways now.

Different ways frauds get credit card information

It’s not just skilled hackers or pick-pockets that are using other peoples’ credit cards. Though the latter two of these categories certainly exist, another huge portion of the credit card scamming community exists out there.

Credit card skimmers

Credit card skimmers are small devices placed on gas pumps or ATMs.

Like their name suggests, they “skim” card information and submit it to a third party. Usually, skimmers are placed on unattended card readers.

Before you place your card on any device, make sure the card reader has not been tampered with.

Check for a seal and date so you can gain peace of mind that your transaction is secure.

RFID skimmers

Yet another way to obtain credit card information is with Radio Frequency Identification technology or RFID.

This is a type of technology where small pieces of data are transferred via electromagnets.

It fuels garages and gates to open, among other things, and in recent years it’s been used to authenticate payment devices, like debit and credit cards.

Supposedly, scammers can use a collection device of some kind to read your payment information just by being in close contact with your wallet.

However, there are plenty of RFID protection devices out there. In fact, it’s a step that can give you peace of mind.

How to protect your credit card information

There are some things you can do to avoid scammers or others fraudulently using your credit card.

Be alert. Know where your card is at all times. Keep it in a safe space and check on it from time to time.

Doing so can ensure that your card has not been misplaced. A lost card can be picked up and used by someone.

Keep a close check on your credit account. Whether you receive paper or digital statements, knowing what’s charged, and when can alert you to any fraudulent charges early on.

Next, use smart online practices. Only log in to your credit card account on private or secure wifi settings. Public wifi is easier for hackers to crack because wifi broadcasts data to anyone in range.

Then, when shopping online, you should only purchase from secure sites.

Beware of scam sites. Check for authentication before ever entering your card info.

Avoid looking into emails or calls where a scammer might be asking for your information, too. Legitimate financial sources would not typically call you and ask to obtain information.

See the National Credit Union’s fraud prevention guidelines to learn more about bank fraud prevention protocol.

Authenticate to avoid falling for a credit-info obtaining scam.

Passwords should also be secure. Don’t use the same one for all accounts. Use safe practices like this to help keep scammers at bay.

How often does credit card fraud take place?

A study by Fool.com found that there were over 1 million U.S. credit fraud cases reported in 2020. The Federal Trade Commission estimates that 2020’s credit card fraud in the U.S. was at a whopping 1.4 million.

As of August when this report was written, stats had not updated for 2021. However, the Identify Theft Research Center reports a 17 percent increase from the 2020 estimates.

The rise in ID crimes is the reason why it is important to keep your information safe. Being diligent about any charges that fall on your account is an easy defense you can apply daily.

That number is up more than 40% from 2019; if the number keeps rising at this alarming rate, consumers are in for a ride with their credit card usage.

Experts say this jump is also likely due to the number of credit cardholders in existence, with more and more users relying on credit cards as the main source of payment options.

With the convenience there also comes risks. Fraudsters are taking advantage of this hike too.

They see the opportunity and are going after it in full force. They are forcing new tech to block their efforts by taking what isn’t theirs.

Check fraud prevention guidelines from your card issuer

New credit cardholders may be unsure of how credit fraud prevention procedure should go. This leaves them open to scams.

Read your user agreement on a new card to get insights on your card provider’s fraud prevention services. In the event that you lose your card, or suspect it stolen, you may be able to freeze it temporarily.

A credit card freeze is when you put a hold on your credit account or credit report because you suspect fraud. This gives you some protection from racking up score damage from a fraudster’s abuse of your account.

Check the Federal Trade Commission for more info on credit card freezes.

While new technology continues to thwart fraud, it’s also important to stay up-to-date on your account and ensure no foul play exists. Hackers see opportunity at all times and are relentless going after it.

Final thoughts on credit card fraud

A brief recap of what we covered:

Credit card fraud can take many forms. It takes place when a card is stolen and used in person, when someone obtains card info and uses it online, and even when family members use a loved one’s card. This is still considered fraud and can be punishable by law if the family member chooses to pursue legal action.

Skimmers, scammers, and online predators look for easy data

Scarier still, there are many ways scammers can obtain credit card information. Stay on the lookout for potential fraud, such as devices that will collect your credit card info, hackers that break in online, and more.

Save yourself with smart habits

Smart habits alone can help keep fraud at bay, but it’s just one piece of the puzzle. Remain diligent as technology changes and stay aware of how the industry changes.

It’s a small yet important step that can keep you ahead of fraud before it happens to you.

If you do fall victim to credit card fraud, don’t fret. Take a look at our article on what to do to minimize the damage as much as possible.

How Vital protects your account

Vital is the credit card that rewards you to share and spend responsibly. Apply today to get the app that keeps track of all your credit Vital Signs and helps you monitor your account with built-in fraud protection alerts.

Vital Card blog posts are intended for informational purposes only and should not be considered financial or any other type of advice.