Understanding credit card fraud and how to report it
Credit card fraud is the most common type of identity theft, according to 2022 data from the Federal Trade Commission (FTC).
The good news is that if this happens, there’s a clear set of steps to follow. And when reported, the financial and emotional impact of credit card fraud can be reduced.
- Victims of credit card fraud should report it immediately to their card issuer.
- The Fair Credit Billing Act limits cardholders’ liability for unauthorized charges to $50.
- Some issuers, including Capital One, offer $0 liability for unauthorized charges.
- An individual’s credit scores may be affected if fraudulent activity isn’t reported and bills go unpaid.
- Checking bills and credit reports regularly for errors and fraudulent activity can help limit any impact to your credit.
What is credit card fraud?
Credit card fraud is a form of identity theft that occurs when someone uses another person’s credit card or credit card information to buy something or access an account without permission. The scammer doesn’t need to actually have the physical card to commit this type of fraud.
Credit card fraud sometimes gets confused with credit card disputes. A dispute may occur when a cardholder doesn’t agree with how a company has used their card—but has still given them permission to use it. Generally, this isn’t considered credit card fraud. This applies even if a scammer has persuaded someone into purchasing something with their credit card. In other words, if the cardholder has authorized the purchase, it may not be credit card fraud.
Because the process for disputing a charge is different from reporting fraud, cardholders need to be clear about whether they’re dealing with fraud or a dispute.
Types of credit card fraud
Credit card fraud can take many different forms, and it’s getting more sophisticated all the time. Here are some common types:
Card-not-present (CNP) fraud
CNP fraud is committed over the phone or online when a scammer has the card details but not the physical card. This information could have been bought on the dark web—or could have been acquired through a phishing scam or data breach.
Credit card skimming
Credit card skimming occurs when someone creates a fake—or cloned—card using someone else’s information. Thieves place a device called a skimmer over the card slot on an ATM or other card reader, like at a gas pump. When you slide your card through the slot, the skimmer reads and stores all your data. Thankfully, cards that come equipped with EMV chips make it more difficult for scammers to create duplicate cards.
Credit card application or account fraud
Fraudsters often get a hold of personal information by dumpster diving, skimming or stealing mail. With details like your home address, Social Security number and birthdate, they might be able to access your credit card account or apply for a new card in your name.
Lost or stolen card fraud
Lost or stolen card fraud is an old-school credit fraud method. It can happen when a fraudster uses a card that someone has lost, whether they dropped it in the street, had it stolen in the mail or were pickpocketed.
Signs of credit card fraud
Here are some common signs to look for if you suspect credit card fraud:
- Unfamiliar transactions on monthly account statements
- Small account charges, which hackers sometimes use to avoid detection
- Blocked access to an account
- Changes to a credit report that weren’t authorized, like new or unfamiliar accounts or addresses
- Unexpected calls from creditors or collection agencies
How to report credit card fraud
The sooner credit card fraud is detected and reported, the quicker you can stop any unauthorized spending in your name. That can help protect your credit score and limit your liability for any fraudulent charges.
When credit card fraud is suspected, it should be reported immediately using these steps:
1. Confirm the charges are fraudulent
If you’ve noticed one or more charges on your account you don’t recognize, you can follow these steps before reporting credit card fraud:
- Go back through your receipts to remind yourself where you’ve been, what you’ve bought and how much you’ve spent.
- Look up the merchant online to see if it has a parent company or a business name different from the one you know. That name might be the one that’s on your bill.
- Check with any family members or friends authorized to use the account to make sure they didn’t make the transactions in question.
You could also set up instant purchase notifications in the Capital One Mobile app to monitor your account. You can enable notifications that include the amount of the purchase and information about the merchant.
2. Contact the card issuer immediately
If you suspect credit card fraud, you should contact your credit card issuer immediately to report it. The issuer will then begin a fraud investigation where they will collect any necessary information to make their assessment.
If fraud is suspected, the card will be locked so that no one else can use it. You can also freeze your card directly through most credit card mobile apps.
As part of the process, the existing credit card will likely be canceled and a replacement card with a new number will be issued.
If you still have the physical card, you can call the toll-free number on the back of the card. If you don’t have it, you can also contact your card issuer by letter or email.
Many companies also offer fraud reporting directly through their app or website.
3. Set up a fraud alert with a credit bureau
Setting up a credit card fraud alert makes it harder for anyone to change the details of any existing credit accounts or to open new ones. When in place, a fraud alert requires potential lenders to verify the identity of the applicant before creating any new accounts in their name.
To set up a fraud alert, you only need to contact one of the three major credit bureaus—Equifax®, Experian® or TransUnion®. The bureau contacted will then alert the other two. The alert can also be canceled at any time.
Credit freezes are a similar option. But they require you to set up a freeze at each individual bureau.
4. Consider filing an FTC complaint
Filing a report through the FTC at Identitytheft.gov can assist law enforcement agents in their investigation and in recovering any stolen belongings. The FTC refers any reports made to the relevant authorities and offers resources to help get victims back on track.
How to prevent credit card fraud
- Enable notifications and security features. Instant purchase notifications might help you keep track of spending in real time. Plus, fraud alerts and card-lock features can help you spot unusual or suspicious charges or allow you to lock your card. Capital One customers can access and enable security features by adding the Capital One Mobile app to their phone or by signing in to their account online.
- Keep your account information secure. Don’t give account information over the phone without confirming that the caller is who they say they are.
- Secure the physical cards. Never lend a credit card to anyone, and shred any old cards, statements and receipts. Wallets or purses should also be closely guarded when out in public, and never leave them unattended.
- Watch out for suspicious behavior. Stay alert during any transaction that requires handing over a credit card. And don’t place your card into any card-reading device that seems unusual. This could include the device being loose, crooked or damaged.
- Review your statements and credit reports regularly. Save receipts to compare them with monthly statements and make sure that everything looks correct. It’s also a good idea to check your credit report as often as you can and question anything you don’t recognize.
- Be cautious when making online purchases. Be on the lookout for phishing scams that require opening a link or an attachment, or ones that ask for money or personal information.
- Monitor your credit score. CreditWise from Capital One lets you monitor your credit score and receive alerts when something changes on your credit report. This can help you see potential fraud quickly. CreditWise also offers free dark web monitoring. And it’s free for everyone, not just Capital One cardholders.
Credit card fraud FAQs
Here are some of the most commonly asked questions about credit card fraud:
Can credit card fraud affect credit scores?
Many credit card companies won’t hold a cardholder responsible for any reported fraudulent charges made to the account. But if it goes undetected or unreported, credit card fraud can negatively impact an individual’s credit score.
Is credit card fraud a felony?
In some cases, credit card fraud can be a federal felony. Under state law, it can depend on the state in which the crime is committed and the total amount of the fraudulent charges.
Penalties for credit card fraud include imprisonment, fines and more.
How is credit card fraud investigated?
During a credit card fraud investigation, card issuers may contact the merchant that authorized the transaction in question to get more information. This could also involve requesting police reports and receipts to compare signatures.
The card issuer must respond within 30 days of receiving a report, but the investigation can take up to 90 days. During this time, you won’t have to pay for the disputed charges, and you won’t get charged interest on them, either.
Credit card fraud in a nutshell
When someone steals your credit card or credit card information to make fraudulent purchases, it can impact your overall financial health. That’s why working to prevent credit card fraud is important.
While the law and credit card issuers may be there to help, it’s still a good idea to be careful. Cardholders can learn the signs of fraud and act quickly to report suspected fraud and prevent it from happening.
And there are many ways to help keep your credit cards safe from fraudsters. These include enabling your card’s security features, shredding old credit cards when you get new ones and not sharing account information over the phone. You can also use virtual credit card numbers to protect credit cards during online transactions.
We hope you found this helpful. Our content is not intended to provide legal, investment or financial advice or to indicate that a particular Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional.
Capital One does not provide, endorse or guarantee any third-party product, service, information, or recommendation listed above. The third parties listed are solely responsible for their products and services, and all trademarks listed are the property of their respective owners.
Your CreditWise score is calculated using the TransUnion® VantageScore® 3.0 model, which is one of many credit scoring models. Your CreditWise score is a good measure of your overall credit health, but it is not likely to be the same score used by creditors. The availability of the CreditWise tool depends on our ability to obtain your credit history from TransUnion. Some monitoring and alerts may not be available to you if the information you enter at enrollment does not match the information in your credit file at (or you do not have a file at) one or more consumer reporting agencies.
CreditWise Alerts are based on changes to your TransUnion and Experian® credit reports and information we find on the dark web.