This is the third post in our HackNotice Recovery series, detailing the most common threats and how to mitigate your risk.
If you haven’t yet become a victim of credit fraud, consider yourself lucky. According to data from Mint, credit card fraud was the second most common type of identity theft reported in 2020, after government document fraud. And, in 2019, the US accounted for more than a third of all credit fraud losses globally, according to Nilson Report.
This form of fraud is among the most common because, unfortunately, it’s relatively easy. Today, criminals can capture credit card data via skimmers, phishing, e-commerce, malware, data breaches that expose millions of people at once, and even scam phone calls. And while “chip and pin” processes have reduced in-store fraud, online credit fraud has surged — especially during the pandemic.
But, as we often remind our readers, you’re not powerless in the fight against cybercrime. Today, we’re walking through how credit fraud happens and how you can fight back.
What is Credit Fraud?
Credit fraud is an umbrella term for any fraudulent purchases made while using someone else’s identity and credit standing, physical credit and debit cards, or credit and debit card data. In some cases, financial institutions will flag unusual charges and alert you so you can let them know whether the transactions are fraudulent or not. But, in some cases, criminals’ actions fly under the radar. As with any type of financial fraud, if you’re not paying close attention, or wait too long to notify your bank or credit card company, you could risk losing some or all of your lost funds.
Here are a few common examples of credit fraud:
This happens when a criminal gains access to your name and card details and leverages that data to make purchases — usually online. In most cases, a criminal steals your information on their own, or purchases it on the dark web.
Lost or stolen cards
This happens when a criminal steals your physical cards (often by pick-pocketing you or breaking into your car or home) or finds them (such as in the case of a lost wallet or card left on the table at a restaurant). The criminal then uses your card to get money from an ATM and/or make purchases online and in-store.
This happens when your bank or credit card company sends you a new or replacement card in the mail, and a criminal intercepts it. This often happens when criminals steal mail from peoples’ mailboxes.
If a criminal can obtain credit card data by skimming, phishing, or any other method, they may use these details to create counterfeit or doctored cards. Some counterfeit cards are highly convincing and can fool even the most skeptical retailer. Microchipping has cut down on this type of credit fraud, but it still happens.
This happens when a criminal steals enough of your personally identifiable information (PII) to complete a credit card or loan application in your name.
How to Fight Credit Fraud
While there’s no way to prevent credit fraud entirely, there are several things you can do to mitigate your risk — and cushion the blow, should you become a victim:
Pay close attention to your credit card statements
Keep an eye on your credit and debit card activity, and review your monthly statements in detail. Look for any suspicious transactions — no matter how small or insignificant they may seem.
Monitor your credit
In addition to reviewing your transactions, it’s also a good idea to use a credit monitoring service. This way you’ll be alerted every time something changes on your credit — such as when there’s a new line of credit or a change to your credit utilization. (For example, several large purchases could set your utilization off-balance and may be indicative of fraud.)
Don’t wait to report suspicious activity
No matter what, don’t wait a single moment to report possible fraud to your bank and credit card company. The longer you wait, the more you risk losing. Not only could criminals strike again, but you may exceed the reporting deadline. Additionally, you should notify the credit bureaus.
Beware of skimmers
Credit card skimmers aren’t always easy to detect because they often look exactly like a regular card reader. But if an ATM or point-of-sale system feels loose or shows signs of tampering, it’s best to avoid using it. It’s also a good idea to report any suspected skimmers to prevent others from being scammed.
Verify retailer reputation before purchasing
Just because a website seems legitimate doesn’t mean the company isn’t shady. Before you make a transaction with a business you’ve never used before, check their credibility. You can do this by looking the organization up on the Better Business Bureau website and Who.Is database.
Leverage actionable threat intelligence
Many instances of credit fraud happen in the wake of data breaches or hacks when criminals buy and sell stolen information on the dark web. Actionable threat intelligence will monitor your PII and let you know, in real-time, if hackers have stolen your data or leaked your identity. This way, you can quickly change your passwords, alert the necessary institutions, and prevent account takeover and credit fraud before the situation worsens.
As e-commerce continues to grow, so will credit fraud. By understanding how it happens and taking all the necessary steps to protect yourself, you can reduce your risk of becoming the next victim.