How to Prevent Credit Card Fraud

Dealing with credit card fraud can cause unwanted aggravation and can be time-consuming. If you suspect any fraudulent activities or have become a victim of credit card fraud, contact your card issuer immediately.

Here, we’ll discuss the basics of credit card fraud and what you can do to protect yourself.

What is credit card fraud?

Credit card fraud is when an unauthorized user uses your credit card to make purchases. Because your credit card is tied to your individual identity, credit card fraud is classified as a type of identity theft.

There are many subcategories of credit card fraud. Each is unique and requires you to take steps to protect yourself, so it’s worth understanding them.

Types of credit card fraud

The main types of credit card fraud involve illegally using your information to make a purchase, applying for credit cards with your identity and taking control of your account.

Card-not-present (CNP) fraud

Card-not-present (CNP) fraud occurs online or over the phone when an unauthorized user has access to the information on your card (i.e., your name and the card number) but not the physical card itself. There are numerous ways the unauthorized user could have gotten access to your information, such as purchasing it on the dark web, getting it after a data breach, or phishing via email, phone or text message.

Credit card application fraud

Alternatively, someone might use personal information such as your Social Security number and address to try and apply for a credit card in your name.

Account takeover

With the same personal information, someone can take control of your existing credit card account directly. This would allow them to not only make transactions, but also access even more of your information and financial details.

Lost or stolen cards

If your card is lost or stolen, someone could start trying to use it fraudulently. If you’ve lost your card or suspect it’s been stolen, call your card issuer and cancel it immediately.

Credit card fraud prevention

There are some basic steps you can take to protect yourself from credit card fraud. They may not protect you from every source of fraud, but they can help keep your credit card accounts safe.

Prevent credit card skimming

You may have noticed the magnetic strip on the back of your credit card. What you may not have realized is that it is possible to steal the information on the card by reading that strip.

This is known as skimming, and it occurs when someone tampers with an ATM, gas pump or similar card readers by installing a device called a skimmer. Once the skimmer is in place it can collect card numbers from the magnetic strip when the card is swiped. Thieves collect and use this information to make fraudulent purchases.

Protect yourself by checking the card reader before swiping or inserting the magnetic strip on your card. Most card issuers now provide cards with chips and, if you can, use the tap feature on the card reader to complete the transaction. If you do not have a card with a chip, contact your card issuer and request one.

Beware of phishing

Phishing refers to the practice of using mail, email, phone or text messages to try and elicit information that can then be used for fraud.

Today’s phishers are persistent and sophisticated. If you have any doubts whatsoever about the authenticity of a message, spend a few minutes verifying it. Don’t give out personal information.

Regularly review the transactions on your credit card account

Though today’s card issuers have sophisticated fraud-detection systems, it’s still a good idea to review your transaction history on your own. Check transactions regularly by logging into your online credit card account to make sure all the information is accurate.

Avoid saving your credit card information online

The convenience of online payment and password storage comes at a cost.  A hacker who gains access to your browser may have your credit card information and anything else you’ve stored.

If you want to do more to decrease your likelihood of being the victim of credit card fraud, take the extra time to manually enter your information instead of saving it online.

Avoid public Wi-Fi for financial transactions

The sort of free public Wi-Fi you find at restaurants or shopping centers is notoriously insecure. These networks might be unencrypted or otherwise have weak security, which means that stealing the information passing through them can be easy.

Your best bet would be to not use public Wi-Fi at all. If you do use it, don’t give out any sensitive personal information and, if possible, use a virtual private network (VPN) for added safety.

Understand your credit card’s fraud policies

Card credit issuers are required to limit the liability of consumers for credit card fraud, and some issuers have zero liability policies. Citi, for example, provides $0 liability on unauthorized charges on consumer credit card accounts. Check the terms of your credit card to understand its specific policies relating to credit card fraud.

How to identify credit card fraud

There are a few signs that you’ve become a victim of credit card fraud. Obvious ones are transactions you don’t recognize, accounts you can no longer access or anomalies like addresses that aren’t yours showing up on your credit report.

If you can identify any of these signs, take steps to report the credit card fraud and secure your account immediately.

How to respond to credit card fraud

If you detect fraud, it's important to act quickly. Here are some steps you can take if you believe you’re a victim of fraud:

  • Contact the credit card company immediately to report fraud.
  • Update your security details, such as your password, PIN or security questions.
  • Get in touch with a credit bureau to let them know what’s happened. 
  • Check your bank and credit card statements to see what sort of damage, if any, has been done.

Depending on the type of fraud, you may decide to freeze your credit or place a fraud alert on your credit report.

Use best practices for credit card fraud prevention

Like monthly payments, security is an ongoing responsibility with a credit card. By learning about the basic types of credit card fraud, how to spot the signs that you’ve been a victim and how to respond appropriately, you become better equipped to prevent fraud as well as detect and stop it if it happens.

Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.

Additional Resources

  • Utilize these resources to help you assess your current finances & plan for the future.

  • Learn how FICO® Scores are determined, why they matter and more.

  • Review financial terms & definitions to help you better understand credit & finances.