Credit Card Fraud Protection

Credit card thieves are finding increasingly clever ways of getting your credit card information without ever touching your card.

For example, in a recent case of credit card fraud, thieves used credit card numbers stored in iTunes, a software distributed by Apple for their iPod mp3 players, to purchase and resell iTunes gift cards. Victims had trouble resolving the fraud because the charges appeared to be legitimate.

Credit card thieves can steal credit card information by hacking into computer systems, phishing, skimming (also called "shoulder-surfing"), or old-fashioned dumpster diving and mailbox raiding.

Federal laws somewhat protect you from fraudulent charges

Federal laws like the Fair Credit Billing Act (FCBA) offer a fair amount of credit fraud protection. If you think your credit card information has been compromised, contact your issuer immediately. The sooner you report the theft, the lower responsibility you’ll have for damages. If you report a theft before unauthorized charges are made, you won’t pay anything. However, if you wait until after fraudulent charges appear, you could be liable for up to $50. For a list of billing errors you can dispute under the Fair Credit Billing Act, visit our guide on Correcting Credit Card Billing Errors.

Debit cards represent more risk

Debit cards and check cards, even those bearing VISA or MasterCard logos, don’t have the same amount of fraud protections as credit cards do. These cards carry a greater liability if you wait to report losses or thefts. If you notify your bank within two business days of learning about a loss or theft, your liability is limited to $50. After that, you could be liable for up to $500. Unfortunately, if you wait more than 60 days, you could lose all the money in your account and be responsible for overdraft charges that occur because of fraud.

Debit card fraud is worse since you lose funds in your checking account and risk overdraft charges. Your bank may reverse the charges, but it takes time. Check your account frequently online or through an automated telephone line.

Preventing credit card fraud

The only way to eliminate credit card fraud completely is not to have a credit card at all. Of course, that isn’t always feasible or advisable, since smartly using a credit card is a good way to build and maintain a positive credit history. But there are things you can do to prevent credit fraud from happening to you.

• First, make sure you know where your credit card is at all times. During busy shopping times like the holidays, put your wallet in your front pocket where it’s more difficult for thieves to snatch it. Always carry your purse close to your body and never leave it unattended.
• Never let your credit card out of your sight, even when you hand it to a cashier. Put your credit card away quickly after the transaction is complete. Thieves have been known to take pictures of credit cards using camera phones.
• Review your receipts before signing them to make sure the amount is correct. Don’t sign a blank receipt because thieves can write in any amount when you’re not looking. Save your receipts and compare them to your billing statement to ensure you were billed for the correct amount.
• Don’t let anyone borrow your credit card. Though the borrower may not use your card fraudulently, they may lose it.
• Don’t write or email your credit card number and avoid saying your credit card number aloud where you can be overhead. Only give your credit card number to reputable companies on calls you initiate. Finally, make sure you only contact your credit card’s customer service using the number on the back of your credit card.
• Remember the importance of notifying your card issuer early if you feel your credit card information has been compromised.