Credit card fraud: How to spot and report it
Credit card fraud: three words that can put a damper on your travel, business or everyday life. Unfortunately, you can't prevent credit card fraud by keeping physical possession of your rewards credit cards. After all, you could still fall victim due to a data breach, a credit card skimming device, malware on your computer, a phishing scheme or other attempts at unauthorized use of your cards.
Luckily, you can minimize the inconvenience of credit card fraud by spotting it early and reporting it quickly. Here's what you need to know about spotting and reporting credit card fraud.
What is considered credit card fraud?
The FBI defines credit card fraud as "the unauthorized use of a credit or debit card, or similar payment tool (ACH, EFT, recurring charge, etc.), to fraudulently obtain money or property." In other words, if someone steals your credit card information or otherwise uses your credit card account for purchases or transactions you didn't authorize, that's credit card fraud. Credit card fraud usually happens in one of two ways:
- You lose your credit card, or your credit card is stolen, and then it is used to make purchases or other transactions — either online or in-person.
- Your credit card account number and security PIN are stolen and used to make unauthorized purchases or transactions without your physical card.
Related reading: Credit card fraud vs. identity theft -- How to know the difference
How to spot credit card fraud
The best way to spot credit card fraud is to monitor your card account frequently for unfamiliar charges. It's best to do this throughout the month so you can catch any unfamiliar charges quickly. But, at a bare minimum, you should review the charges on your billing statement every month before paying your balance.
If you have authorized users on your account, you'll want to ask them about any charges you don't recognize. You may want to ask that authorized users submit receipts for any purchases they make on your account, as this can help you determine which charges are authorized.
Related reading: Credit cards with the greatest value for authorized users
You can also set up spending notifications for most accounts. These notifications can usually be sent by email, text or through a push notification on your phone and are a great way to see when and how your card account is used — especially if you have authorized users on your account.
Related reading: How to prevent credit card fraud
How to report credit card fraud
If you spot unauthorized transactions on a card, the best way to report credit card fraud is to call your credit card issuer. It's safe and easy to use the number on the back of your card, since you know this is the official phone number. But, if you don't have your card, you can usually find the issuer's phone number on a recent billing statement or by logging in to your online account.
You'll want to use the phone number associated with your account if possible, as this will reduce the number of security questions you need to answer. Once you get a representative, tell them that you've detected an unauthorized transaction on your account.
Related reading: How I learned that my credit card number was stolen
This same advice holds true if your card has been lost — regardless of whether it has been used. Report it immediately in order to prevent that loss from turning into fraud.
What happens when you report credit card fraud?
When you call your card issuer to report credit card fraud, the representative will ask you questions and then usually deactivate your compromised card and card number. You'll be issued a new card, which will generally be sent to your home address. If you need the card urgently, be sure to say so as the issuer may be willing to overnight you the new card.
Usually, calling your card issuer is all you need to do if you detected unauthorized transactions on just one card account. But, it's a good idea to check your credit report, keep an eye on your other accounts and bank statements and regularly change your online passwords. When you check your credit report, look for unfamiliar inquiries, new accounts you didn't authorize or addresses where you've never lived as these can be signs that someone has stolen your identity. And, make sure you recognize all activity on your accounts and bank statements. If you notice any issues, take appropriate action quickly as you could be a victim of identity theft.
Related reading: How to check your credit score for absolutely free
Are you liable for unauthorized charges on your credit card?
One fear when you see unauthorized charges on your credit card is that you might be liable for those charges. Luckily, the Fair Credit Billing Act (FCBA) limits your liability. Specifically, the Federal Trade Commission notes that:
Under the FCBA, your liability for unauthorized use of your credit card tops out at $50. However, if you report the loss before your credit card is used, the FCBA says you are not responsible for any charges you didn’t authorize. If your credit card number is stolen, but not the card, you are not liable for unauthorized use.
In other words, if you keep your physical card in your possession or you're able to report that your card is stolen before it's actually used, you won't be liable for any charges. Even if the physical card is stolen and charges are made before you report the theft to your card issuer, you'll only be liable up to $50. In fact, many cards go a step farther by offering a fraud liability benefit that means you won't be responsible for any unauthorized charges if your card is lost or stolen.
Related reading: Why a credit card is a smarter choice than a debit card
Should you file a police report for credit card fraud?
You usually don't need to file a police report for credit card fraud.
However, if you also believe your identity has been stolen, you should take additional steps. One such step is to file an identity theft report with your local police station. Another such step is to contact each of the major credit bureaus to set up a fraud alert on your credit reports, or even place a credit freeze on your credit reports.
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