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Credit cards have always been targeted by hackers and thieves, and that is unlikely to change anytime soon. Unfortunately, the most common scams have changed right along with technology, which means scammers are always coming up with new tricks that catch the general public off guard.
Credit card identity fraud scams are a big issue for cardholders to be wary of. According to a 2022 study of identity fraud by Javelin, losses from identity fraud scams in 2021 amounted to $28 billion and impacted 15 million U.S. consumers. Javelin identifies identity fraud scams as those in which criminals had direct contact with the victims.
And the Federal Trade Commission says that it got about 390,000 reports on credit card identity theft fraud in 2021, which was the second largest category for identity theft fraud (behind fraud related to government documents or benefits).
Skimming scams happen when fraudsters get your card information by skimming it when you conduct transactions at, typically, retail point-of-sale devices, automated teller machines (ATMs) and gas stations.
Criminals tinker with these devices so as to capture your card information. They could then make fake cards with it. For instance, they could attach wiring to a fuel pump at a gas station. Or they could place a card skimmer inside an ATM card reader.
Why? Because, by and large, robocalls promising to lower your interest rates are always fraudulent. No matter what a company claims, nobody can do anything for your interest rate that you cannot do for yourself. If you want a lower interest rate from your card issuer, the FTC recommends calling your issuer and asking for one.
According to the FTC, individuals who are tricked into paying third-party companies for a lower interest rate never see the promised savings and struggle to get refunds. Giving these companies your credit card information also leaves you open to other types of scams, like the use of your credit card number to make fraudulent purchases.
According to Chris McHargue, previously the principal financial services industry consultant for fraud at SAS, phishing schemes have been around for a long time and remain a significant problem. While phishing can take on several different forms, it usually occurs when a fraudster contacts the target victim by phone or, increasingly, online via some social engineering scheme in order to extract card, account or banking credentials or other personal details.
According to Ahren Tiller, an attorney at The Bankruptcy Law Center, another credit card scam to watch out for involves any Social Security benefits you receive. Tiller noted scammers may call pretending to be from the Social Security Administration and say one of two things:
In either case, the scammer is hoping to get their hands on your credit card details or bank account information. However, there are a few red flags to look out for. For example, they might rush you and demand that you provide them with personal information or your Social Security number immediately, and this is never a good sign.
They may also try to trick you by using fake caller IDs or official-sounding names, says Tiller. Additionally, scammers may ask for payment in order to receive your benefits or give you a phony bank routing number to deposit your benefits into.
Another scam to watch out for is when a criminal pretends to be an employee of the Federal Deposit Insurance Corporation (FDIC) or another government agency. In some cases, they might even use the real names of government officials in order to seem more legitimate.
The good news about most types of credit card fraud is that consumers are typically not on the hook. Thanks to protections in the Fair Credit Billing Act (FCBA), consumers are limited to $50 in liability for fraudulent charges, although most credit cards come with $0 fraud liability policies.
Still, just canceling your card may not be enough since your information may have been compromised as well. As a result, you should keep a close eye on your credit reports to ensure nobody is fraudulently claiming your identity and opening up fake accounts.
If you find fraud on your credit reports, the Consumer Financial Protection Bureau (CFPB) recommends placing a fraud alert on your credit reports with all three bureaus. You can also consider freezing your credit reports with Experian, Equifax and TransUnion, which you can do for free.
Finally, you should report any scams you encounter to the FTC since they can use this information to spot trends, build a case against criminals or educate the general public. Report to the FTC at
ReportFraud.ftc.gov.
You can protect yourself from scams by keeping an eye on your accounts and credit reports, being skeptical of phone calls or social media messages from someone asking you about your accounts (or pretending to be from your bank) and keeping your personal information (including credit card details) secure.
If you find that some of your information has been compromised, report it to your issuer immediately to have the account closed, then file a report with the FTC and potentially with local law enforcement, too.
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