Fraud

What Is Credit Card Fraud?

Written by Dan Rafter for Symantec

You’re studying your credit card statement and you notice a $200 charge at a nearby electronics store. Problem is, you haven’t shopped at the store in months. That suspicious charge could be a sign that you’ve been a victim of credit card fraud.

Credit card fraud happens when someone — a fraudster or a thief — uses your stolen credit card or the information from that card to make unauthorized purchases in your name or take out cash advances using your account.

Credit card fraud isn’t rare, and it could happen to you. This is why it’s so important to take the steps necessary to help prevent it.

How does credit card fraud happen?

Here are some common ways fraudsters can get their hands on your credit card number.

  • A thief digs through your trash, finds discarded receipts or credit card statements that include your account number, and uses that information to rack up fraudulent charges.
  • An unscrupulous waiter steals your card number and uses it to finance, say, a Caribbean vacation.
  • An identity thief lures you to a fraudulent website where you are tricked into providing your card number. The thief then uses your credit card information for fraudulent purchases.
  • You swipe your card at your local ATM or at the gas pump. Later, you notice fraudulent purchases on your statement. What happened? Someone might have installed a credit card skimmer to steal your account information. A credit card skimmer is a small device that thieves can install anywhere you swipe your card. Skimming has proved to be an effective way for thieves to steal credit card information.
  • Sometimes your credit card information is stolen through no fault of your own. Your credit card number might be exposed in a data breach that hits one of your favorite retailers. Thieves can then use this information to rack up online charges with your credit card account numbers.
  • Thieves often buy stolen credit card numbers on the dark web, that part of the web that’s only accessed through special software. Credit card numbers are valuable to thieves, and they aren’t shy about visiting illegal dark web markets to get them.
  • Someone in your home — a resident, guest, visitor, or service technician — might manage to access your credit cards. It’s possible the person could use your credit card information fraudulently.

What’s your legal liability when someone makes fraudulent charges on your credit card account? The law protects you fairly well. The Fair Credit Billing Act says the most you have to pay for unauthorized use of your credit card is $50. If you lose your card and report its loss before someone else uses it, the law says you’re not responsible for unauthorized charges. If someone steals your credit card number — but not the card itself — you’re not liable at all.

Is credit card fraud considered identity theft?

Credit card fraud is considered a form of identity theft. Thieves are using a portion of your identity — your credit card information — to make fraudulent purchases or to access cash advances.

Is credit card fraud a felony?

Is credit card fraud considered a felony or a misdemeanor? That depends on the state in which the crime was committed.

Different states have different penalties and classifications for credit card fraud. Whether credit card fraud is a felony could also depend on how much a thief racks up in fraudulent purchases.

There are also federal statutes that govern interstate and foreign commerce, making it illegal to use a stolen or fraudulently obtained credit or debit card.

10 tips to help protect yourself from credit card fraud

Criminals have seized upon the credit card industry as a place to make a quick buck. Fortunately, you can help minimize your risk of becoming a victim of credit card fraud by taking steps to protect your credit card information. Here are 10 tips to help you do just that.

  1. Promptly and carefully review every credit card statement. When your bill arrives, don’t just make the payment. Review each transaction and, if any are unfamiliar, immediately call the card issuer. Even better, don’t wait for the statement. Regularly review your transactions online on the card issuer's website.
  2. Protect your account information. Don’t leave account information out in the open where others might see it.
  3. Destroy old statements. When you finish with the monthly statement, shred it before discarding it.
  4. Carry only the cards you need. If you have more than one credit card, do you need to have more than one when you’re out and about or traveling? Reduce your risk, by leaving unneeded cards at home.
  5. Don’t fall for phishing scams. You might receive emails in your inbox from what looks like your cable TV provider, internet service provider, or bank asking you to provide your credit card information, often to avoid losing your service. Don’t fall for these scams. They’re usually run by hackers looking to steal your information. Never send your credit card information to anyone who asks for it online. Call your service provider’s customer service number instead to make sure a request is legitimate.
  6. Check your credit reports: You can order one free copy of each of your three credit reports -- maintained by Experian, Equifax and TransUnion — once a year from AnnualCreditReport.com. Once you order these reports, look carefully for accounts or loans in your name that you don’t remember opening. New lines of credit may have been opened by thieves who have gained access to your personal information.
  7. Watch out for phone scams. Thieves don’t rely solely on the internet to steal your credit card information. They might also turn to the phone. They might call you, saying that they are from your credit card provider. They’ll then ask you to provide your credit card number so that they can “update” your account. Don’t fall for this. Your bank will never ask you to provide your credit card information over the phone. 
  8. Go paperless. Sign up for online statements from your credit card provider and cancel any monthly paper statements. This lessens the chance that thieves will be able to gain access to papers that include your account information.
  9. Report lost cards or suspected fraud quickly. The faster you report suspected fraudulent purchases, the better. Your credit card provider can put a hold on your card or cancel your account if you suspect fraud.
  10. Access your credit card account online. You can spot potential fraud more quickly if you sign up with your credit card provider’s online portal. This way, you can check your credit card account daily, instead of waiting for your monthly statement to arrive.

Online shopper? Stay safe

While shopping online can be safer than sending your credit card number through the mail, there are still precautions you should take when it comes to electronic transactions.

  • Be sure that any page that asks you to enter credit card or other personal information has “https” in the address bar (the “s” means secure). Remember, “https” not just “http”.
  • Avoid phishing scams. These can come in the form of emails that look legitimate but are actually from fraudsters representing themselves as banks, retailers, and other businesses. By clicking on a link in a phishing email, you may be falling into the scammer’s trap. To be safe, type the URL yourself, rather than clicking on an emailed link.
  • Don’t provide any personal information, including a credit card number, unless you initiated the contact. Legitimate businesses will not reach out, asking for your credit card number.

Shopping with credit cards is both familiar and convenient. With a little extra effort, you can also help ensure that your credit card data stays safe.

Would you know if your Social Security number was being used?

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