Credit card fraud explained: Types, detection and prevention strategies you must know

Representative image

What is credit card fraud

Credit card fraud is when someone steals your information without consent to buy things, make withdrawals, or conduct transactions. With the evolution of online payment and digital wallets, thefts are one step ahead in stealing information. Not only do these frauds translate to cash loss, but they also ruin your credit score if left unchecked. Understanding how fraud is being done is the first step to protecting yourself against being taken advantage of.

Common credit card fraud

There are numerous forms of credit card fraud, and they all have their own means of execution. One of the oldest techniques is skimming, where thieves install devices over ATMs or POS terminals to capture card information when it is swiped. Phishing frauds deceive customers into providing information with fake websites or emails. Card-not-present fraud involves the use of stolen card data to shop online but not the card itself. Identity theft, under which thieves impersonate you to open new accounts, is another growing threat. Knowledge of these types keeps cardholders on their guard.

How to detect credit card fraud

The best method for reducing loss from fraud is early detection. Monthly checks of your credit card statements and transaction alerts will notify you of suspicious transactions in time. Most banks and card companies also provide mobile phone apps with up-to-date alerts, allowing you to flag suspicious transactions for instant inspection. Foreign purchases, test charges, or out-of-character small purchases will also raise an alert. Even checking your credit report from time to time ensures no one has applied for a fraudulent account in your name.

How to prevent credit card fraud

Prevention of fraud is a blend of caution and using safe technology. Shop with your credit card only on secure websites that possess secure payment gateways. Do not reveal card details over phone calls, emails, or unsecured networks. Enabling two-factor authentication and setting transaction limits on your card can reduce risks significantly. When it comes to offline transactions, keep your PIN covered at ATMs and never swipe cards on suspicious-looking machines. Periodic change of passwords and monitoring your online record also avoid fraud attempts.

FAQs

1. If I see unauthorized spending on my credit card, what should I do?

Notify the suspicious transaction to your card issuer or bank immediately. Zero liability protection is usually offered by most banks if the fraud is reported early.

2. Does credit card fraud affect my credit score?

Yes, if an illegal transaction goes undetected or unpaid, it can impact your repayment history and credit rating.

3. Is storing card details on websites and apps safe?

Don't store card details on websites. Only save them if necessary, on secure websites with good encryption and strong authentication processes.