With the advent of online banking and shopping, the ubiquity of credit card transactions has become ever so apparent. As a corollary to the application of this newer web-based technology, cases involving credit card fraud have increased substantially, with issuers and cardholders suffering hundreds of millions of dollars in losses annually. While credit card fraud occurs most commonly when placing a telephonic order, access to personal data by way of phishing or identity theft is gaining ground on the internet. Phishing occurs when con-artists and thieves elicit information from a consumer with the intention of assuming his or her identity and stealing benefits or money. For instance, a phisher may request confirmation of personal data for a fabricated reason such as victim’s information being allegedly lost due to a computer glitch or an order being purportedly placed in his or her name. Another popular fraudulent scheme is an email from a lending institution requesting that the victim verify his or her personal information by clicking on a link, which then leads him or her to a counterfeit website. Consumers may also be told that they are being contacted by the fraud department of an established company suspecting that they may be victims of identity theft and then asked to re-enter their personal information. Still another common scam involves notifications to consumers that they won a lottery but have to furnish proof of identity and/or credit card information or pay taxes or transfer fees in order to obtain the funds.
The vast majority of credit card fraud takes place via 1) a stolen or lost credit card, 2) usurpation of a cardholder’s identity and information, or 3) no-card fraud in which a bogus internet website or a shady telemarketer obtains the victim’s credit card data on the phone. Scam artists utilize a wide array of methods to steal consumers’ information and utilize their cards to effectuate purchases. Fortunately, credit card fraud is avoidable, and there are numerous steps that consumers can take to guard against it:
1. Credit cards should be stored in a place that is separate from the rest of the wallet’s contents (i.e. a zipper or a money clip) or in a place other than their wallet.
2. Consumers should ignore ‘phishing’ emails requesting that they visit a specific website to check credit card or personal details or that they furnish credit card information. Legitimate businesses do not request information of a sensitive nature without first having established a relationship.
3. New credit cards should be signed as soon as they are received in the mail.
4. Cardholders should avoid storing their PIN with their credit card. They should memorize their PIN and shred any document containing their PIN.
5. Prior to being discarded, credit cards, receipts, canceled checks, carbons, monthly statements, and credit card applications should be cut up or shredded. To protect against trash dumpster or trash bin scavengers, cardholders can separate the shredded documents into different trash bags.
6. To prevent thieves from copying or capturing their credit card number by camera or cell phone, consumers should keep their credit card out of sight. They should never leave credit cards or receipts in plain view.
7. Carbon copies should be shredded upon receipt.
8. Cardholders who suspect fraud or who find the charges questionable should immediately call or write their creditor. Stolen or lost credit cards should also be reported immediately to the issuer. Many credit card companies offer around the clock service and a toll-free number to resolve such issues. Once consumers report the theft or loss, they will avoid liability for unauthorized charges and pursuant to federal law will only be responsible for a sum not exceeding $50.
9. Before relocating, consumers should notify their creditors of their new address. This will prevent third parties at the old address from accessing the cardholders’ statements.
10. Consumers should not sign credit card receipts before verifying the amount. They should never sign a blank receipt. When signing a receipt, cardholders should cross out any lines that are above the total and contain blank spaces.
11. Credit cards should not be lent to anyone.
12. Consumers should save their credit card receipts to compare them to their billing statements.
13. Bills should be opened as soon as they arrive in the mail and balances reconciled monthly to ensure accuracy.
14. Cardholders should never provide their credit card number or information to a company unless 1) they have initiated the call and are certain that the data is required or 2) know that the company is legitimate and trustworthy. If the consumer harbors doubts about the company’s reputability, he or she should contact the Better Business Bureau or the nearest consumer protection agency.
15. Consumers should only submit credit card information online if the website is secure. This is usually guaranteed by an SSL certificate, a lock in the browser’s bottom right corner, and/or a domain name beginning with https, the ‘s’ confirming that the page is secure, and that it is safe for the visitor to enter his or her credit card information.
16. Documents such as receipts and billing statements that contain credit card numbers should be safely stored.
17. Cardholders should verify that all purchases listed on their billing statements were made by them or an authorized user. If a transaction looks suspicious, they should contact the business to find out what it sells and determine whether they made the charge.
18. When handing their card to a clerk, consumers should see to it that he or she returns it to them as quickly as possible and doesn’t take it out of their sight.
19. Cardholders should never record their account number on an envelope or check.
20. Consumers should keep a record of their credit card information locked in a safe location.
21. Cardholders can protect against identity theft by requesting an annual free credit report either by mail, phone, or online from each of the leading credit reporting agencies (CRAs), namely TransUnion, Experian, and Equifax. CRAs also allow consumers to place fraud alerts on their credit reports. By monitoring their report on a regular basis and reviewing it for unauthorized activity and inaccurate information, consumers can prevent credit card fraud from damaging their credit rating.