A 43-year old single mom, Cheryl, realized something wasn’t adding up. She is diligent about her budget and has always been good about controlling her spending. Despite this, over the last couple of months she’s been spending a hundred dollars more on all her bills. Upon closer inspection, she found the problem. It’s been all those New York City Subway Metro Cards she’s been buying. An easy thing to overlook, given that she lives in Montana.
Someone else has been using a counterfeit copy of Cheryl's credit card to make the purchases. This sort of scenario isn’t all that uncommon. Credit card fraud complaints in the United States have been on rise. In 2015, they reached their highest point since the 2009 recession. Luckily, federal law dictates that consumers can’t be responsible for more than $50 in fraudulent credit card charges. However, that doesn’t mean it’s not a financial risk. Fraud that goes unnoticed by the customer or bank can be costly. There are certain steps individuals can take to help minimize their chances of incurring this fraud cost. Identity theft, when not caught, can have a tremendous impact on the health of your credit history and financial well-being.
Don’t Save Your Payment Information On Retail Sites
It’s tempting to save your payment information in exchange for a faster checkout time. Unfortunately, doing this puts you at greater risk of becoming a credit card fraud victim. Most card information today is stolen through data breaches. When you allow your payment information to be stored on a web server, you are at the mercy of their security standards. Even large, seemingly trustworthy, companies have displayed negligent security behavior. Poor coding, encryption or security training at an online merchant can all lead to your information being stolen.
Once the thieves obtain your credit card details, they can use them to buy things online themselves. Sometimes, card numbers are used months or even years after being stolen. Just because you hear about a breach at a company you do business with and don’t notice suspicious activity on your card doesn’t mean you dodged a bullet. In such a case, it’s better to request a new card be sent to you immediately.
Read Your Credit Card Statements
A shocking number of U.S. credit card users don’t read through their monthly statements. Two fault assumptions are usually to blame for this. First, many people think credit card fraud is always obvious. Fraudsters are clever, and will not always make big purchases that scream “fraud!” Instead, like in Cheryl’s example, the purchases can be small and mundane. This makes them hard to notice without the appropriate level of attention. Some people may also assume the bank will always catch fraudulent activity. While computer algorithms that detect this sort of thing have improved over the years, they are still not perfect. Some small regional banks, for example, may not be as quick to notify their customer of suspicious activity.
Consumers who set up auto-pay on their credit card bill are particularly at risk. While it’s a great way to avoid late payments, auto-pay makes us lazy about checking the balance and statement every month.
Make Sure You’re Using an EMV Credit Card
Credit cards in the United Sates have become a lot more secure last year through the introduction of EMV chips. The little metallic squares on credit cards make them significantly harder to counterfeit than the old magnetic strip cards. However, not everyone has an EMV credit card yet. For example, Mastercard estimates that 88% of their US credit cards now have chips on them. If you’re one of the 12%, contact your issuer to see if they started updating. If they did, request a new credit card with the chip.
Note that EMV chips will not protect you from online fraud, like we described in the first point. You still have to be vigilant when using your card to make online purchases. Experts estimate that fraudsters are likely to target their efforts on online fraud because of the recent influx of EMV cards. If that’s the case, consumers need to be more careful than ever before.
Beware of Skimming Devices
One of the more popular ways thieves get their hands on your credit card is through the use of skimming devices. These are frequently attached to ATMs and payment terminals at inconspicuous locations – such as gas stations. The devices are often placed over the card reader. Once you insert your credit card, it scans the magnetic strip on it and stores the data. The thieves then retrieve the device after some time, and proceed to make counterfeit copies.
Even people with EMV credit cards are at risk. The fraudsters can still use a counterfeit card at any of the millions of merchants who haven’t upgraded their Point of Sale systems to accept chip payments.
An easy way to check for skimming devices is to pull on a card reader. Simmers will frequently come off easily. Also, look for signs of something being out of place. If one card reader looks different than all the other ones at an establishment, there’s a possibility it has a skimmer attached to it. As always, being vigilant pays off.