Chris Bridges, Founder and CEO, VITAL Card
While owning a credit card comes with multiple perks and rewards, it also has its fair share of risks.
A pin or password alone is not sufficient to protect your card; you must take many more preventive measures to ensure your credit card’s safety.
What Is Credit Card Fraud?
Credit card fraud occurs when your card is being used for purchase or withdrawals without your consent or knowledge. This unauthorized usage can occur either because your physical card was stolen or your card details were stolen and used online.
Alternatively, credit card fraud may also take place due to identity theft. For example, the perpetrator might use your details, such as name, social security number, etc., to carry out various financial activities such as procuring a loan, opening a credit card account, or filing taxes.
How Does Credit Card Fraud Occur?
Scammers are constantly looking out for your personal information. To help you spot scammers in various situations, we have listed down a few ways in which they can attack you:
Phishing involves scammers sending unsolicited emails or messages that trick people into clicking on fake links within them.
Usually, they pretend to be from reputed companies and persuade their targets to reveal sensitive information like account numbers, passwords, etc.
Scammers sometimes even pretend to be bank representatives asking customers for details to resolve made-up scenarios. Phishing is one of the most common ways for scammers to procure people’s credit card information and misuse it.
Making a website is pretty easy in today’s day and age. Scammers create fake, unsecured websites to trick people into carrying out transactions using their credit cards.
Subsequently, their credit card information is saved on these websites and misused.
Hacking is a malicious act involving scammers gaining unauthorized access to your devices, eventually compromising almost all the data present in them.
It is a common way for scammers to access your credit card information.
Scammers can leak credit card information through skimming. A skimmer is a device used to skim data from the magnetic strips present on credit cards.
These devices are usually hidden in public places such as petrol stations or ATMs. Scammers often install cameras close to the skimming devices to capture your entered pin.
Saved Credit Card Information
Making online payments has become easier than ever before, but it comes with risks. Many websites provide the option of saving card details for future use. While this seems convenient, it causes harm through potential credit card data breaches.
For example, Capital One, one of the leading credit card companies in the US, was subject to a credit card breach in 2019. The hacker gained access to the personal information of around 106 million Capital One customers.
Unauthorized Wi-Fi Usage
Public Wi-Fi networks are usually unencrypted, making it easy for hackers to access your sensitive information through them.
Using public Wi-Fi might seem convenient and easy, but carrying out any form of financial transaction on these networks can expose you to hackers.
Websites Offering Credit Card Rewards
You might have come across websites claiming to grant rewards or cash bonuses. Usually, they ask for your credit card details to transfer the amount into your accounts.
It is your responsibility to stay alert in such situations and not fall prey to these websites.
Physical Loss of Credit Card
One of the easiest ways to be a victim of credit card fraud is by losing your card. Getting a hold of your physical card gives scammers direct access to your information.
Later in this article, we have discussed ways to safeguard yourself in case your credit card is ever stolen.
How To Prevent Credit Card Fraud
If you have a credit card, taking preventive measures against credit card fraud is of utmost importance. Let us look through the different methods of preventing credit card fraud:
Opt for $0 Liability Credit Cards
Many credit card issuers have taken it one step further and now offer $0 liability credit cards. As a result, the cardholders are not liable to pay any unauthorized amount.
Previously, users trusted the Fair Credit Billing Act (FCBA), which ensures that all credit card users are well-protected against fraud by limiting the user’s maximum liability to $50 in case of any fraud.
Use Known Wi-Fi Networks
It is best to use only known and password-protected Wi-Fi networks when carrying out any form of financial transaction online. Your best option may be investing in a VPN service for your mobile and home use.
Public and unknown Wi-Fi networks pose a severe threat when carrying out financial transactions.
Monitor Credit Reports Regularly
Tracking reports helps you spot any suspicious transactions, enabling you to take prompt action.
Credit card reports have all your transactions stated concisely; therefore, it is advisable to go through these reports and monitor all your transactions from time to time.
Avoid Saving Credit Card Information
We suggest you avoid saving your credit card information on any website to prevent you from identity theft or credit card fraud.
Ever seen the save this credit card button on either Google Chrome or Safari? While this may be convenient, it risks exposing your details to possible data breaches.
Protect Yourself From Phishing
Your credit card company will never ask you to disclose your credit card details to them, especially via email or text messages.
Watch for phishing emails and messages consisting of multiple red flags that aren’t too hard to spot. These red flags include suspicious email ids, illegitimate company logos, the use of urgent tones, persuasion to click on random links, etc.
Protect Yourself From Skimming
Signs of tampering might be one of the biggest indicators of the presence of skimmers at the ATM. If you are suspicious that an ATM or gas station pump has been tampered with, it’s best to switch to another one.
Using EMV chip cards is yet another measure to protect yourself against such frauds, as they are computerized chips that generate a unique code for each transaction, making stealing their data much harder.
Use Only Secure Websites
Using secure websites for financial transactions helps prevent credit card fraud.
Check the encryption software used, ensure that the URL begins with ‘HTTPS,’ and check for the presence of a padlock symbol at the beginning of the address bar.
Utilize the Transaction Alerts Facility
Most credit card companies allow you to turn on transaction alerts for various services, including balance transfer requests, international purchases, exceeding credit limit, etc.
Signing up for these alerts can help you recognize fraudulent transactions in time.
Utilize Your Mobile Applications for Payments
We suggest you utilize mobile payment applications to make credit card purchases and safeguard yourself.
Tokenization makes credit card payments via mobile applications, like PayPal, Google Pay, etc., much safer than any other form of payment. Tokenization carries out transactions by masking your credit card number, ensuring safety.
Freeze Your Stolen Credit Card
If your credit card gets stolen, you must freeze or cancel your card by reporting it to your credit card company. There are two ways to protect your information – Fraud Alert and Credit Freeze.
A fraud alert allows creditors to personally call and verify your identity if the scammer has applied for opening a new account.
A credit freeze prevents creditors from accessing your credit reports, hence making it unlikely for them to approve the scammer’s attempted transaction or application.
Enter Your Pin/Password Carefully
Make sure to cover your credit card’s pin or password while making payments in public spaces. You might find thieves trying to look over your shoulder and peak at your pin, putting your credit card security at risk.
Avoid Posting Your Sensitive Information on Social Media
Social media is a powerful tool scammers use to gather information about their targets. They keep a close watch on things you post and can, over time, collect all the relevant information required to commit fraud or identity theft.
What To Do Next
Credit card fraud may have been one of the most recurring frauds of 2020 but can easily be avoided by being alert and taking precautionary measures.
Therefore, we highly recommend you keep track of your credit card transactions with cards like VITAL and adopt as many preventative measures as possible to stay ahead of scammers.
When it comes to credit card fraud, prevention is definitely better than cure.
“Consumer Sentinel Network Handbook (2021),” Federal Trade Commission
“Fair Credit Billing Act,” Federal Trade Commission