Million Dollar Journey has featured a series on scams of the modern world but credit card fraud is a topic that deserves its own column. Year-over-year statistics for 2009 and 2010 (could not find more recent data) indicate that dollars lost through credit cards (Visa, MasterCard, and Amex) stolen, counterfeited, fraudulent online and phone usage, etc. increased by 2.05%. Closer inspection of the data indicates that all categories except for fraudulent online and phone purchases (+25.40%) and account takeovers (+9.26%) went down. Developments in technology and more canny crooks have contributed to the overall increase.

How does the fraud happen?

Crooks need to get their hands on a consumer’s credit card information in order to perpetrate the crime. Stealing personal information could occur by skimming the card through a secondary reader, capturing card information from improperly shredded (or not shredded at all) credit card statements in the trash can, phishing for details through emails that either contain fraudulent links or ask the recipient to reply with card details, or hacking into store databases to get the same information. Once the thieves get the credit card details, they can either sell this information to other criminals or use the card themselves to make unauthorized purchases.

How to prevent credit card fraud

Credit card companies have started rolling out new credit cards with chip technology, in addition to the existing magnetic stripe, to make it tougher for thieves. The embedded microchip encrypts the stored information making it difficult to counterfeit.  Combine this with the personal identification number (PIN) and you have a relatively strong layer of security.

Nevertheless, losing the credit card and creating an easy-to-crack PIN could still be recipe for disaster. In addition, credit card companies have protection policies in place to safeguard the consumer from credit card fraud.

From a consumer’s standpoint, there are several things we can do to make it almost impossible for criminals to get our credit card information. A brief list is included below but a comprehensive one can be found at this Financial Consumer Agency of Canada page.

  • Cover the keypad when entering the PIN;
  • Avoid giving your credit card or PIN to anyone;
  • Shred credit card statements properly;
  • Obtain your credit report for free once a year to review your history;
  • Maintain a list of contact numbers that would be needed in case of credit card theft or loss; and,
  • Secure your online transactions by paying attention to the website and getting to it from your bookmarks or favorites rather than by clicking on an email link.

If your best efforts have failed…

If you face the unfortunate situation of watching someone else use your credit card information, follow the steps below:

  • Contact the credit card issuer immediately; the phone number should be on the back of the card. Of course, if the card is stolen, the contact list that you maintain will be a savior;
  • Inform the credit bureau agencies [Equifax Canada: 1( 800) 465-7166; TransUnion Canada: 1 (877) 525-3823], so that fraud alerts may be placed on your credit report; and,
  • File a report with the local RCMP.

Have you been a victim of credit card fraud? Do you have any tips to offer for the rest of us to remember?

About the Author: Clark works in Saskatchewan and has been working to build his (DIY) investment portfolio, structured for an early retirement. He loves reading (and using the lessons learned) about personal finance, technology and minimalism. You can read his other articles here.


  1. on May 1, 2013 at 11:25 am

    I had a friend who never covered up his pin when paying with his credit card because he thought, ‘if they don’t have my card, how can they get access’?
    One of the surest ways to be a victim of credit card fraud is to be ignorant on how your data can be re-created to be used anywhere.

    You mentioned getting your credit report once every year, personally, I check twice – once in January, and once in July just to be safe. Also given the fact that if there is an error that you need to submit, that can take a few weeks to months to get rectified. Knowledge and awareness is power.

  2. Jenn on May 1, 2013 at 11:37 am
  3. Bill on May 1, 2013 at 1:30 pm

    I have been hit twice over the years (pre-PIN cards). Both as a result of skimming the card. Both times it was for over $5,000.

    Both times I was alerted by the card company calling me – did I just authorize a large purchase in another city/country? Um, no!

    Cards canelled immediately and it was no problem dealing with the CC company at all – all charges reversed. Reporting agencies notified etc. Biggest pain was waiting for the replacements to arrive via mail.

    I check both rating agencies once per year – but offset them by 6 months. So January for Equifax and July for TransUnion.

    PIN’s definitely will help. Be aware and take steps but it is not the end of the world. Setup alerts via email/text if you want. I check my transactions online every 2-3 days.

  4. Steve on May 2, 2013 at 11:03 am

    My PIN CC was compromised two weeks ago. Two fradulent purchases made online. Since online purchases only require card #, exp and 3-digit ‘sec’ code, the PIN doesn’t help with that.

    That means someone just wrote down my details. Skimmers can’t grab 3-digit sec code, so it had to be a case where they physical took my card and wrote it down.

    Since most restaurants I go to have mobile readers they bring to your table, I suspect its a restaurant that insists you HAND them the card at the till, they swipe it for you, then hand you the PIN handset. A small camera behind the register could grab the info if youhold the card in front of it, flip it, then swipe it.

    Dealing with the CC company regarding the fraud so far has been commendable.

  5. on May 2, 2013 at 11:25 am

    Good point Steve, I’ll be much more mindful of handing over my credit card for them to swipe… it takes a second for them to see the cvv number.

  6. Evan on May 2, 2013 at 3:14 pm

    In that case, has anyone ever blacked out the CVV number (after memorizing it)? It’s always punched in, so it becomes a second PIN if it’s blacked out.

  7. FrugalTrader on May 2, 2013 at 7:45 pm

    How many of you actually cover your pin as you punch it into the machine? I’m surprised that credit card transactions don’t require a pin when purchasing online.

  8. KC @ genxfinance on May 3, 2013 at 7:24 am

    Fraud transactions occur mostly online. Credit card information that can be seen on your card are the only things that you need. There is no swipe so transactions can be done easily. So don’t wave your credit card around and secure the information.

  9. on May 3, 2013 at 3:48 pm

    FrugalTrader, I always block my pin… but in a more subtle way. I just use both hands to punch in my pin :)
    I’ve taught my son to do the same too. Credit card companies are good with detection and notification but I’d rather not go through the entire hassle if I can prevent it.

  10. trish on May 6, 2013 at 4:29 pm

    Some credit card companies are better or worse at helping fraud. I have always hear great things from Discover. I always hide my pin when I type it in especially at the grocery store I feel like people stand closer than normal in line.

  11. Dona Collins on May 7, 2013 at 1:08 pm

    I think it’s important to keep a careful eye on your banking account statements, too. With the online access, it’s easier than ever before. I happened to check my account once and noticed an odd $3 transaction to a strange gaming site. I immediately cancelled my debit card. I probably caught the test transaction before the real damage was done; and I was lucky. My dad was not so lucky once and caught someone slowly draining funds from his account years ago; and it just recently happened to a friend of mine too (in the thousands). Protect yourself!

  12. Harry on May 19, 2013 at 6:30 am

    With rising credit card frauds, I tend to be quite cautious when handling my cards or using them to buy online. People also tend to not care too much about clicking on random links, which makes them highly vulnerable since most of these frauds take place through phishing.

  13. meghan on June 5, 2015 at 2:30 am

    I just recently had fraud on my account and canceled my debit card immediately. I got a temporary one until my real one comes in the mail. When I spoke to the representative at the bank he said the new cards with the chip are supposed to be safer, and to avoid using debit if at all possible. I have learned to use a temporary credit card from Walmart if I plan to purchase online. What are some other helpful tips to keeping my card safe?

    • FrugalTrader on June 5, 2015 at 6:59 am

      Meghan, was it your debit card or your credit card that was used by the thieves?

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