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.