Credit card companies are constantly trying to make their services more secure and safer to use. However, credit fraud is still an unfortunate reality for many consumers. It is important to understand what it is, how it happens and how it may be prevented.
Basic Types of Credit Fraud
When an individual uses a credit card to purchase goods and/or services with no intention of paying for them, they are committing credit fraud. However, this is a broad category that may be broken down into different types.
It is easier for someone to commit credit fraud if they do it under someone else's name. And if an unauthorized person uses your personal information to commit credit fraud, this is called identify theft.
Most of the time, criminals will "borrow" your identify in order to make a handful of unauthorized transactions. However, when this is done long term, it is called identity assumption.
When a thief hacks into one or more of your existing accounts and makes unauthorized transactions, this is known as a fraud spree. Usually, these actions occur rapidly, one after the other, before the victim has time to notice the activity.
How Credit Fraud Happens
Knowing that these kinds of things can happen to ordinary consumers should prompt you to be careful with your credit cards, your online accounts and anything that contains personal information.
Thieves employ various methods for getting your information, so you can never be too careful with your paper documents, online activity and brick-and-mortar transactions.
Your Credit Cards May be Lost or Stolen
Always keep your credit cards in a safe place and close to you at all times. If you notice that one is missing, report its absence right away to the issuing company. Even if the card turns up later, it is always better to err on the side of caution.
Your Mail May be Stolen
If you have a mailbox in the open, you may be vulnerable to mail theft. With this in mind, it may be wise to go paperless with most of your accounts. Granted, many criminals make careers out of hacking into online accounts, but there are companies that offer fraud protection, and online activity can be monitored. It is, on the other hand, unlikely that you will be able to find someone who is willing to stand guard over your mailbox while you are away.
Someone May Look Over Your Shoulder During a Store Transaction
When you are paying for items at a brick-and-mortar store, you may not notice the person standing behind you in line. However, that person may be watching you and stealing your credit card information. So, always be aware of the people around you in a store. Hand your card to the clerk as discreetly as possible. Or, if you are swiping the card yourself, do this quickly and use your hand to conceal your pin number. Also, make sure to put your credit card away as soon as you have paid.
You May Receive an Unsolicited Email
Sometimes thieves rely on people being far too trusting and, masquerading as a legitimate company, they will simply ask for the personal information they want. So, never, ever, provide personal information or passwords in a response to an email. If a company with whom you have a relationship needs information from you, you should be provided with a link to a page that will allow you to log in securely before submitting anything.
A Thief May Go Through Your Trash
If you are not taking the time to properly dispose of sensitive papers, you may be providing thieves with a lot of personal information. A shredder is cheap to buy and a wise investment. All of your credit card and bank statements, utility and medical bills, and any other papers that contain personal details should be shredded before they are thrown away.
Sadly, even a careful consumer may become the victim of credit fraud. This is why you should keep a close eye on your credit reports and bank statements. If you do discover that someone is using your information to commit fraud, this must be reported immediately. Dealing with credit fraud is never fun, but taking quick action may shrink the damage that is caused.
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