Every day, more than $2 million is stolen from American consumers and credit companies via fraud. Chances are you’ve either experienced it, or you know someone who has. While most cardholder agreements don’t hold you accountable for all of the loss that can occur with credit card fraud, you still need to be on your guard. Undoing fraud can be a real pain in the neck, and every incidence of fraud leads to higher rates and retail prices.
More than a third of that fraud occurs online. Scammers use a number of techniques to get your credit card number and use it for their own ill-gotten gain. So, how do you protect yourself and avoid credit card fraud online? There are three simple steps you need to follow:
Step One: Know how it happens
There are a number of techniques thieves use to commit credit card fraud. Here are a few:
- Overcharging.This is perhaps the most common scenario. It involves charging your card for an amount greater than the intended purchase.
- Scam websites.Some online stores are simply fake. They don’t sell an actual product or service; they collect credit card information and make charges on those cards.
- Skimming. This is a trend whereby a thief uses a device that will record your credit card information during a legitimate transaction. In the case of online skimming, this may happen via hacking, while in the real world it usually means a physical add-on to an ATM or even a gas station pump.
There are more, but you get the idea.
Step Two: Work to prevent it
You also need to protect yourself. You can do that in several ways:
- Be choosy.Don’t put your credit card number into a site that you don’t fully trust, and that isn’t using a secure shopping cart, which is indicated by including an ‘s’ in the ‘http’ indicating it is a secured page.
- Read your bill.Always verify that your transaction amounts are correct, each and every month.
- Protect your physical card. Letting your card out of your sight for even a few minutes (such as while the waiter takes it to pay your bill) puts you at risk. Avoid this whenever possible.
You can’t prevent every possible incident, but by being circumspect you can prevent many.
Step Three: Know how to respond
No matter how cautious you are, credit card fraud can still happen. When it does, you need to know what to do.
The first thing you’ll want to do is contact the credit card company. Notify them that there is a fraudulent transaction and have them shut down the card.
Consider having a fraud alert put on your credit report, too. This will prevent thieves from opening new credit in your name. While simple credit card fraud doesn’t usually lead to identity theft, it can, and this will protect you.
Depending on the situation, you might inform the police. If your wallet is missing and you suspect someone is physically using your cards, a police report is definitely in order. If the fraudulent transaction happened online, you should report it to the FTC right away so that they can investigate.
Credit card fraud isn’t completely avoidable. But if you know how to recognize it, do some things to prevent it, and know how to respond, you can come out on top.
David Rodwell is a seasoned writer in business and economics, taking a particular interest in credit card processing. You can find more of his articles located at CreditCardProcessing.net.