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Avoiding Credit Card Fraud

Credit card fraud is a wide-ranging term for identity theft and fraud committed using a credit card or other form of credit as a fraudulent source of funds in a transaction, usually by an outside person. The cost of credit card fraud reaches into billions of dollars annually, and is a rampant although not a runaway problem. According to the Federal Trade Commission, while identity theft had been holding steady for the last few years, it saw a 21 percent increase in 2008. However, credit card fraud, that crime which most people associate with ID theft, decreased as a percentage of all identity theft complaints for the sixth year in a row.

The most common use of identity theft today involves crooks opening a new credit account in your name. This type of fraud affects almost two-thirds of identity theft victims, and most don’t even know until it’s too late.

The most common scenarios that start the process are:

A thief goes through the victim’s trash to find discarded receipts or carbon copies, and then uses your account numbers illegally.
A dishonest clerk makes an extra imprint from your credit or charge card and uses it to make personal charges.
You respond to a mailing asking you to call a long distance number for a free trip or bargain-priced travel package. You're told you must join a travel club first and you're asked for your account number so you can be billed. The catch! Charges you didn't make are added to your bill, and you never get your trip.

It's not always possible to prevent credit or charge card fraud from happening, but there are a few steps you can take to make it more difficult for a crook to capture your card or card numbers and minimize the possibility.

The good news is more people are paying attention to charges on their bills and statements today and only about a third of the identity theft victims found out about their identity being stolen through calls from a collection agency or a denial of credit -- long after the damage had already been done.

That's much better than the 82 per cent of victims in 2007 who found out their identity had been stolen after dealing with adverse situations, which suggests that today more people and more businesses are keeping an eye on preventing identity theft.

Everyday Tips for Guarding Against Credit Fraud

Do:

Sign your cards as soon as they arrive.
Carry your cards separately from your wallet, in a zippered compartment, a business card holder, or another small pouch.
Keep a record of your account numbers, their expiration dates, and the phone number and address of each company in a secure place.
Keep an eye on your card during the transaction, and get it back as quickly as possible.
Submit your credit card information only to trustworthy websites that use a legitimate bank/payment gateway and display the encrypted/secure logo (usually a lock symbol) on the bottom of your browser
Void incorrect receipts.
Destroy/shred carbon copies
Save receipts to compare with billing statements.
Open bills promptly and reconcile accounts monthly, just as you would your checking account.
Notify card companies in advance of a change in address.

Don't:

Lend your card(s) to anyone. Ever.
Leave cards or receipts lying around
Sign a blank receipt. When you sign a receipt, draw a line through any blank spaces above the total.
Write your account number on a postcard or the outside of an envelope.
Give out your account number over the phone unless you're making the call to a company you know is reputable. If you have questions about a company, check it out with your local consumer protection office or Better Business Bureau.

What if I lost my wallet or purse?

File a report with the police immediately and keep a copy.
Cancel all credit, debit and ATM cards immediately. (Debit/ATM card cancellation is of utmost importance and should be done first, as you are much less covered financially than with credit cards).
Get *new* cards with *new* account numbers.
Call the fraud departments of the major credit reporting agencies.
Ask each credit bureau to put out a fraud alert on your accounts.
Report the loss to the fraud department at your bank.
Review your credit reports regularly and have them corrected when necessary.
Report a missing driver’s license to your state’s department of motor vehicles.
If your keys are missing change the locks on your home and car.

What are the signs of credit fraud?

Stay alert for the signs of identity theft such as:

Noticing accounts you didn't open and debts on your accounts that you can't explain.
Fraudulent or inaccurate information on your credit reports, including accounts and personal information, like your Social Security number, address(es), name or initials, and employers.
Failing to receive bills or other mail. Follow up with creditors if your bills don't arrive on time (a missing bill could mean an identity thief has taken over your account and changed your billing address to cover his tracks).
Receiving credit cards that you didn't apply for (though this happens quite often legitimately)
Being denied a credit card, or being offered less favorable credit terms, like a high interest rate, for no apparent reason.
Getting calls or letters from your credit card company or businesses about merchandise or services you didn't buy.

What if you’re a victim of credit fraud?

Protect yourself - First, make sure a security alert or victim statement is on file with all national credit bureaus.
Inform the creditor - Contact each creditor with the fraud account and inform them that the transaction or account in question is fraudulent.
Document all contacts - Make notes of everyone you spoke with; ask for names, department names, phone extensions; record the date you spoke to them.
Understand the process - Each creditor may have a different process for handling a fraud claim. Make sure you understand exactly what is expected from you, and then ask what you can expect from the creditor. At the conclusion of an investigation, ask the creditor for a document that states you are not responsible for the debt.
Follow up - Make sure everything a creditor/credit bureau has requested is received. It is always a good idea to place a follow up call or send a letter for confirmation.
Review reports regularly - Obtain another report several months AFTER you believe everything is cleared up. If a new fraudulent account is discovered, you know how to handle it. If your credit report is back to normal, you can feel confident that all issues were resolved as you expected. It would be a good idea to check your credit report again in six months and a year later.
Don't throw away files - Keep all notes and correspondence in an accessible file in case they are needed in the future.

Report Credit Card Fraud

Many credit card companies have toll-free numbers and 24-hour service to deal with credit card loss and fraud emergencies. By law, once you report the loss or theft, you have no further responsibility for unauthorized charges. In any event, your maximum liability under federal law is $50 per card.

If you suspect fraud, you may be asked to sign a statement under oath that you did not make the purchase(s) in question.

If you’ve been a victim of identity theft, the FTC can help too. By reporting your information to Consumer Sentinel, the FTC can assist law enforcement agencies in putting an end to these problems. Consumer Sentinel is a secure online database that records Internet, telemarketing and identity theft complaints, as well as other fraud-related activities. You will still need to report these crimes to your local police. Click here to go to Consumer Sentinel.