This is How Credit Card Frauds Are Caught

In 2020, 393,207 credit card frauds were reported across the country, a 44.7% rise from 2019. This warrants the question of how is there so much credit card fraud, and how is credit card fraud caught?

Data is inarguably the most valuable commodity in today’s fast-paced digital world. However, due to its abundance and accessibility, it is often mishandled or exposed.

For example, most of our personal information is available online, more than we know or perhaps would even care to admit. This makes it vulnerable to people who can steal, misuse, or manipulate our information against our consent or knowledge. One of the most common ways our data is misused is through credit card fraud. Here’s all you need to know about it.

How do you detect credit card fraud?

Here are some habits and tips that can help us stay vigilant and defend against fraud:

Review your statements: Regularly reviewing your transactions can help you identify fraudulent activity sooner. If anything seems odd, you should call and report it to your credit card company ASAP.

Monitor your credit reports: Routinely check your credit reports to identify accounts or loans you may not have applied for. If anything looks fishy, notify your credit issuer immediately.

Be careful with your cards: Only carry cards you need at the time. Keeping all your cards with you only increases the risk of them getting misplaced or stolen. If your card is stolen, don’t wait until you get home; report it immediately.

Avoid paper: If your monthly statements are delivered by mail, make sure to dispose of them in a manner that makes your details impossible to read. Shredding your statements before discarding them can make stealing your information more difficult. Alternatively, it might be a good idea to opt for paperless statements.

Watch out for scams: Phishing and phone scams are the most common ways for scammers to access your information. Always check and verify the legitimacy of emails or phone calls that ask for your credit card or account details.

Be careful where you buy from: Most known online marketplaces operate through well-protected servers; however, it never hurts to verify before entering your credit card or bank account information on a site. A simple way to do this is by looking for a lock sign at the beginning of the address bar of your web browser. Alternatively, you can check whether the URL in the address bar starts with ‘HTTPS’ or ‘HTTP,’ as HTTPS tends to be more secure.

While disappointing, don’t stress if you find yourself a victim of credit card fraud even after using all these precautionary efforts. There are several measures set in place by credit card issuers and agencies to identify and fight against it.

Vital also has a step-by-step guide to reporting credit card fraud. Keep reading VITAL Blog to get more insights.

What is credit card fraud?

Credit card fraud occurs when someone gains unauthorized access to your credit card, debit card, or bank account details and makes purchases or withdrawals in your name. This type of criminal activity is often directly linked to identity theft.

Here’s how credit card fraud occurs

Remote fraud: This type involves the scammer misusing your credit card or account details without requiring your physical card. They could have accessed basic personal information, such as your name, credit card number, and expiration date, which allows them to commit fraudulent activity online, by mail, or via the phone.

Lost or stolen cards: Thieves can use card information obtained through finding lost credit cards or stealing credit cards to make online purchases or apply for new lines of credit.

Counterfeit or fake cards: This can occur in instances where a counterfeit copy of your card has been created using devices such as skimmers. Skimmers are usually attached to card readers or ATMs and capture information from the card’s magnetic strip.

Application fraud: Criminals may sometimes use stolen information like your name, address, date of birth, social security number, etc., to apply for a new line of credit. They don’t need to steal your physical card but may steal or forge documentation to support their application claims.

Intercepting cards in the mail: A simple way for thieves to obtain your details is by stealing your card if your credit card company sends out a new or replacement card by mail. To avoid this, most issuers use unmarked packaging when sending cards.

Although it’s not possible to completely prevent credit card fraud, there are ways to protect ourselves from it.

How do credit card companies monitor fraud?

You, as a cardholder, are primarily responsible for notifying your card company in case of unauthorized payments. Many major card issuers also offer additional measures to detect fraud, including algorithms to recognize suspicious transactions that the cardholder would not usually make. Some measures include features built into the card itself, such as:

Cards with EMV chips: EMV chips tend to be more secure than magnetic strips as they can guard us against skimmers. Unfortunately, their standardization has also led to the evolution of skimmers into shimmers: devices that capture information by reading the EMV chip when your card is inserted in a card terminal.

Digital cards: Many banks now issue digital card numbers for credit cards, allowing users to perform transactions online without revealing their actual card details; therefore, keeping their information protected. These help against shimming too.

Card locks: This is a common feature among issuers that enables card owners to temporarily freeze their online accounts and prevent further transactions if they are unsure whether their card is lost or stolen.

Risk scores: Credit reporting companies often assign risk scores to transactions based on factors like amount, card history, device location, etc., which can help merchants approve or deny transactions. Risk scores help inspect online transactions based on the buyer’s IP address, shipping address, and other order details.

These initiatives taken by credit card companies and related agencies help reduce the likelihood of fraud; however, they have also promoted the evolution of scams that try to overcome them. For this reason, several bodies of the U.S. government help regulate credit fraud and offer assistance to those who fall victim to it.

Which government agencies deal with credit card fraud?

Many institutions deal with credit card fraud, from the local police to federal agencies. The jurisdiction depends on the type and severity of the crime.

The Department of Justice is a federal agency investigating mass-market fraud, including credit card fraud. Such crimes include phishing scams, data breaches, hacking, and other fraudulent schemes that harm a group of individuals or organizations.

The U.S. Secret Service is primarily tasked with law enforcement, criminal investigations, and offering special protection programs. This puts device-related fraud, such as skimming and shimming, under its jurisdiction. The secret service also investigates identity theft cases linked to credit card fraud.

The Federal Trade Commission protects consumers by eliminating unfair, deceptive, or fraudulent practices in the marketplace. Even though it does not conduct independent investigations, it does offer advice on dealing with lost or stolen credit cards. This can be particularly helpful when victims of credit card theft are struggling to figure out the next steps toward reporting the crime.

The Federal Bureau of Investigation is the prime law enforcement agency of the U.S government, but like the Federal Trade Commission, it only advises victims of credit card theft.

How do card issuers and the law protect victims of credit card fraud?

As per the Fair Credit Billing Act, your liability is limited to $50 regardless of the amount of the unauthorized charges. Several credit card companies go a step further by offering zero liability policies and not holding consumers responsible for any fraudulent charges. This means you won’t incur any charges if only the information is stolen and not your physical card or if the theft is reported before any unauthorized payments are made.

When you notice and report suspected fraudulent activity in your account, your credit card company may cancel your card, send you a replacement, and initiate a fraud investigation. Even if you’re not refunded the amount in question instantly, you’re not responsible for it during the investigation period. Your card company may also inquire with the merchant that charged your card.

If you have indeed been a victim of credit card fraud, the investigation results will help determine whether your card company or the merchant are liable for covering the charges.

Credit card fraud not only causes financial distress but can affect individuals mentally and physically. This brings us back to the point that our data and information are invaluable and should be handled with utmost security.

So, if you’re looking for a company that not only cares about you but also ensures all your data is well protected, we invite you to apply for early access to Vital Card. As the world’s first social credit card, we pay you to share and spend responsibly.

If you have indeed been a victim of credit card fraud, the investigation results will help determine whether your card company or the merchant are liable for covering the charges.

So, if you’re looking for a company that not only cares about you but also ensures all your data is well protected, we invite you to get early access to VITAL now! As the world’s first social credit card, we pay you to share and spend responsibly.

Sources

“Consumer Sentinel Network, Data Book 2020,” Federal Trade Commission

“How To Prevent Credit Card Fraud,” NerdWallet

“Cyber Investigations,” United States Secret Service

“Fair Credit Billing Act,” Federal Trade Commission

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

How is credit card fraud faught?