How to Protect Yourself From Credit Card Fraud
Credit card fraud is increasingly becoming rampant in today’s world and takes place in a variety of ways.
With the galloping rate of technological advancement around the globe, you can’t easily prevent it from happening, but you can create some obstacles that will frustrate the fraudsters from getting hold of your cards. To clearly understand the techniques used to perpetrate theft, you first need to understand what credit card fraud is all about. Credit card fraud is a form of identity theft that is committed using a payment card such as a credit card or a debit card to fraudulently obtain unauthorized funds from another person’s account.
The rationale behind credit card theft is either to obtain unauthorized funds from another person’s account or to acquire goods without paying. Although credit card theft is only limited to some few accounts, its impact is huge as it results in high-value transactions. Studies show that out of the 12 billion account transactions that were done in 1999, approximately ten million turned out to be fraudulent. Fortunately, your financial liability is limited by the law in such cases of credit card fraud.
How Credit Card Fraud Happens
Credit card theft can occur in various ways from a high tech hacker to a low tech dumpster. The fraud begins with either the loss of the card or through a serious compromise of the system data. The fraud resulting from stolen cards can be mitigated by reporting immediately to the issuing bank. Fraud resulting from a compromised account can take weeks or months before the owner knows of such theft. In this case, the card owner may not discover such fraud until they receive the billing statement. Cardholders can mitigate against such fraud by checking their accounts activities frequently and reporting any suspicious transactions. Various methods that fraudsters use to defraud cardholders are discussed below:
When a credit card is stolen or lost, it may fall into the hands of a fraudster who may use the card for unauthorized transactions. Before the card owner notifies the bank to block the card, the card could purchase online goods worth thousands of dollars. Since most banks do have a 24 hours customer service, it is advisable to notify the bank promptly so as to avoid such incidences. This normally happens since a pin is not required for online transactions and the common security feature in most cards is the signature panel that can be forged easily.
Card Not Present (CNP) Transactions
The internet and the mail are the major routes for fraud against merchants and greatly affect legitimate transactions. When the physical card is not present, the merchant has to rely on the information given by the owner or anyone purporting to be the owner. These instructions are usually presented through the internet, telephone and emails. It is very risky and the card issuers normally charge a higher rate in order to discourage these kinds of transactions. This is because it becomes very hard for the merchant to verify the identity of the character authorizing the transactions. One prevention measure by merchants is to deliver shipments to the address approved by the cardholder.
The idea of debit or credit card fraud can strike havoc even to the most tech savvy person. This is because fraudsters keep on upping their game when it comes to skimming. A typical skimming scenario is where a skimmer (a device that skims or copies your card number for fraudulent purposes) is attached to the ATM machine. Once the skimmer copies your credit card number, they can use that number to hack and do any transaction without your knowledge. In most cases these devices are usually linked to a miniature camera that reads the users pin at the same time. This technique is the most dangerous for its difficult to detect it. The best protective measure against such fraud is to always look out for strange gadgets in an ATM machine before initiating any transaction.
Fraudsters may obtain the names and other personal details of the card user and lure them to thinking that they are talking with the representatives of the companies that issued the card. One popular technique is to claim that they are from the “card division” of the issuing bank and wish to verify the account information so as to offer a favorable interest rate. These scammers can be very convincing and sweet to talk to and at last end up getting all your credit card details. It is only after getting the billing statement that you get to know what really happened. The best protective measure is to be very vigilant when giving out your credit card details over the phone.
Unexpected Repeat Billings
These ones are highly imperceptible and carefully concealed charges on the credit card. A buyer may purchase goods from the vendor expecting that the vendor will only charge once. The vendor may charge the buyer small amounts but multiple times until the card expires. The vendor may indicate that the customer is now a “member” in the printed form. This way, the vendor will be able to justify the periodical charges although they were made without the consent of the buyer. Since these charges are small and infrequent, the card holder may not notice them easily. Upon raising concern to the bank, the bank can only offer to cancel and reissue another credit card since it cannot reverse the charges. The key protective measure here is to frequently check you statement for regular and unexplainable charges.
How to Protect Yourself from Credit Card Fraud
Incorporating some few protective practices in your daily routine can help to significantly lower the risk of credit card theft. For example, don’t lend your credit card to anyone, even your friends or roommates. Other protective practices include:
- Don’t give your credit card information to anyone online. Only give it to your bank when you are the one who called for queries.
- Always keep your cards separate from the wallet. This way if anyone gets away with cash, they won’t access your cards.
- Always keep your receipts safe, especially where the card details are printed.
- Always check your statements regularly and learn to reconcile them with the purchases.
- Report any mysterious charges to the card issuer.
- In the event that the card is stolen, report promptly so as to stop any unauthorized transactions.