By: Anna Bartos
Credit card fraud is when someone uses your credit card number to make purchases you didn’t authorize either in person or online. There are many types of credit card fraud ranging from Fraud Spree, which is unauthorized charges on accounts, to Identity Theft, which is when a fraudster uses your personal information such as your social security number, name and birthdate to commit credit fraud. Identity Theft is the most common form of credit card fraud based on the Federal Trade Commision categorization. A good example of Identity Theft is when a fraudster uses your personal information to contact your credit card company claiming that your card was lost or stolen to get your credit card company to send them a new card. According to the Identity Theft Resource Center, throughout the year of 2017, there were 133,015 reports of credit card fraud for the United States, a 7% increase from 2016.
However, from collecting data from the Federal Trade Commission’s Consumer’s Sentinel Data Book and the U.S. Census American Community Survey, Credit Sesame, a financial management platform, found that the percentage chance of credit card fraud varies from state to state with some states being targeted more often than others. They also found that there was a positive correlation between higher income states and credit card fraud and that high levels of poverty corresponded with lower rates of credit card fraud. From the graph and statistics Credit Sesame created, it shows that California is the second state to have the highest credit card fraud and identity theft complaints at a 43% rate, with a 14.3% poverty rate. In Wisconsin, where we live, we rank 37th in the United States for credit card and identity theft with a 37% complaint rate and with 11.8% of the population in poverty.
So how does somebody prevent credit card fraud and what should you do if it happens to you? Since credit card fraud can happen at any time any day, even if your credit card is kept safely in a wallet, it’s still a good idea to be aware of the signs. Some common suspicions are finding that your credit report contains information about accounts you never opened, finding strange charges show up on billing statements, getting bills that arrive from unfamiliar sources, or receiving multiple calls from creditors or collection agencies. If any of these events happen to you, the first step is to call your credit card company immediately so they can close your credit account and give you a new card with a new card number. They will also investigate the unknown charges. Since many companies have zero-liability policies they won’t charge you for fraudulent charges if you report the charge before using the card. Even if your credit card company doesn’t have this policy or you use your card after the fraudulent charge they will only charge you $50 under the Fair Credit Billing Act. The next step is to change your online passwords and PINs for all your financial accounts and to contact the credit bureaus to make a credit freeze from all major credit bureaus. This makes it difficult for fraudsters to open new accounts with your personal information. Lastly, closely monitor your card statements and credit reports for the next few months to make sure fraudsters aren’t doing any more damage since it can take time for fraudulent charges to appear. It also makes sure that you can sleep at night knowing that your credit card account is fixed.
Works Cited
“Credit Card Fraud: What to Do If You're a Victim.” Experian, 21 Sept. 2018, https://www.experian.com/blogs/ask-experian/credit-education/preventing-fraud/credit-card-fraud-what-to-do-if-you-are-a-victim/.
Spychalski, Brian, et al. “What to Do If You're a Victim of Credit Card Fraud.” Credit Karma, Credit Karma, 12 Sept. 2019, https://www.creditkarma.com/credit-cards/i/credit-card-fraud-victim/.
“The 25 States with the Most Credit Card Fraud.” Credit Sesame, Credit Sesame, 8 Oct. 2018, https://www.creditsesame.com/blog/credit-cards/25-states-credit-card-fraud/.
“What Is Credit Fraud?” Experian, 29 Jan. 2018, https://www.experian.com/blogs/ask-experian/credit-education/preventing-fraud/what-is-credit-fraud/.
This is an interesting topic that I doubt many of us know a lot about since it's unlikely any of us have our own credit cards right now, but we all probably will in the future. The 7% increase in fraud that you mentioned is likely due to the rise in prominence of online shopping; since so many sites have struggled with data breaches and other privacy issues, it's no surprise that online shopping can be risky. You clearly did a lot of research on this and the infographic showing fraud rates across the US was very interesting. Thanks for sharing.
ReplyDeleteYou had a really interesting piece Anna, and it was clearly very well researched. In your paper you said that it is a good idea to closely check you credit card statements, because fraudulent charges take awhile to appear. While this is true there is another reason why you should closely check your credit card statements. Many times fraudsters who hack your credit card accounts, and fraudsters in general, start with relatively small transactions or theft. This is because they are waiting to see if you notice and cancel the card. If you don't notice then they increase the volume and amounts of fraudulent purchases because if you did not notice the smaller transactions, you are less likely to notice the big ones. This is why if you catch the fraudulent transactions sooner, you are spared the exponential growth of theft.
ReplyDeleteYour post was very informative for me since I don’t know that much about credit cards. One thing I do know about however, are debit cards since I use mine frequently to make purchases. As you mentioned, a way to prevent credit card fraud is to monitor your billing statements frequently. I do this once every so often with my credit card, as I know that if my card where to get stolen and make purchases that I didn’t make, there’s not much that can be done if I don’t catch it quickly. This makes credit cards seem like a much safer option than debit cards as you said many companies have a zero liability policy, and even if they don’t they can only charge you up to $50.
ReplyDeleteI like all the information you provided. I liked how you related it back to locally with how Wisconsin ranks in identity fraud. I learned a ton about how to prevent the fraud or "attack" it when it first arrives. At first I didn't know much about this so I found this piece very helpful for my finical future.
ReplyDeleteThis article was intriguing to me. It seems although the percentages are fairly high for credit card fraud. It seems although that it always works out for those whose credit cards were stolen, however, I wonder what is going on on the other side of things. Are the frauds ever caught and what is the punishment?
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