Credit card fraud can be a scary proposition in which you and your hard-earned cash are separated from one another. This could be because your card has been lost or stolen, or it could mean that your card number has been stolen from a retailer. Either way, credit card fraud can be a big problem. Fortunately, with most financial institutions you have zero liability for fraudulent purchases.
We’ll walk you through how to spot fraud and what to do if your credit card has been compromised.
How to spot credit card fraud
The best way to spot fraud is to pay a close attention to your account by checking your statements as soon as you get them, or review them regularly online.
Though your financial institution also monitors for potentially fraudulent transactions, there’s just no substitute for paying attention. Checking your statement as frequently as possible ensures that there are no charges that you, or another authorized cardholder, have not made. Your financial institution may be able to send you alerts by email or text if a transaction looks suspicious or meets certain conditions; which is a great way to get an immediate notice of potential fraud. You should look in to whether your financial institution offers notifications and, if it does, take advantage of them.
For example, PenFed members can enroll in Card Security Text Alerts—a card security service that monitors PenFed cardholder activity to help quickly identify transactions that may be fraud.
For avoiding physical card theft, the best way is to make sure you know where your card is at all times. Don’t leave it in your wallet, or lying around where it would be easy for someone else to snag. The more care you take with your card, the less likely it is to be lost or stolen.
What to do if you’re the victim of fraud
Whether your card has been stolen or you’ve spotted a fraudulent transaction on your statement, the most important thing to do is report it immediately. Even if a charge is for a small dollar amount, if you don’t recognize it you should be sure to report it, as it could mean your card information has been compromised. This may lead to bigger transactions in the future.
The faster you let your financial institution know about the problem, the faster you can get the card shut down, receive a replacement card, and remove fraudulent transactions from your statement. Immediate reporting is also crucial because there can be a limited time window for reporting fraud—so don’t wait!
Most cards will have a phone number on the back to contact the issuer, but you should also be able to find contact information on your statement or your financial institution’s website.
Typically, reporting fraud is as simple as speaking to an agent and identifying transactions you believe to be fraudulent. An investigation follows, but most card issuers won’t hold you liable for charges, though it may take some time before the charges are removed from your account. Be sure to document your communication; such as recording dates, names, and other information—just in case you run into any problems.
In most cases, once you have reported fraudulent activity on your card, your old card will be canceled and a new one issued immediately, so be sure to keep an eye on the mail for it to arrive.
Any transactions that were pending when your card was canceled may be declined, so you’ll have to arrange alternate methods of payment. Additionally, any accounts you had that billed to your card will need to be set up with a new card.
The difference between credit and debit cards
Though we often think of credit and debit cards as interchangeable, there’s a key difference in how the two work where fraud is concerned. When you make a transaction with a credit card, you’ll receive a bill at the end of your statement period. However, when you make a transaction on a debit card, the money is simply removed from your bank account.
Though many financial institutions offer similar protection from fraud with both credit and debit cards, you’ll want to check to see what protections are offered for your debit card and, especially, how fast your money will be refunded in case of fraud. If your debit card number is stolen and someone empties your bank account, it doesn’t help to have zero fraud liability when you have bills that need to be paid now.
If your financial institution doesn’t offer the kind of protection you need, you may want to consider switching to a credit card—especially for online purchases, which can sometimes leave your card number vulnerable to thieves, even if your card itself is safe in your wallet.