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Credit Card Fraud: How You Can Prevent It

by Mike Killian

So many consumers are rightly concerned about the perils of using a credit card over the Internet. Yet folks seem very willing to allow their card to disappear even for brief periods while paying for dinner.

Computer technology in general is very sophisticated, so Internet credit fraud is not the only cause for alarm. A dishonest employee no longer needs a pencil and paper to record credit card account information. Small handheld devices can be kept in the pocket until the golden moment. Then, in less than a blink, not only is your card swiped, but your identity, your money, and your peace of mind go right out the window. And you often times won't even know it until you get your statement...if then.

There are many ways to become a victim of credit card fraud. Here are some protections you can employ:

Physical Credit Card Possession: Your personal data (besides any cards themselves) MUST be protected.

  • If you have a rural mail box, you need a PO Box so your bank and credit card statements cannot be lifted.
  • Record expected delivery dates of statements. If late, call the issuing institution.
  • Don't carry a credit card unless you know you will need it. Unexpected purchases with a credit card are not wise anyway.
  • Don't let your credit card out of site when purchasing.
  • Memorize PIN numbers.
  • Read your statements checking for ANY unexpected activity.
  • Shred all statements and receipts.
  • Instruct ALL in the household of fraud prevention.
  • Sign your credit card as soon as you get it or place a statement in place of the signature "See ID."

Telephone Credit Card Fraud

  • NEVER give out personal data over the phone from a call not initiated by you. Call the institution back using a number you have verified to be correct from another source (phone book, Internet, etc.).
  • Deal only with known businesses.
  • Legitimate business will not force you to make a snap purchasing decision. Do not get trapped into "limited time offer", "during this call only," or similar catch phrases.
  • If you are offered a "free prize" do not pay for "fringe benefits." Follow the adage, "if it sounds to good to be true...."
  • If giving to charity, ensure you know the source. You might also want to know how much of your donation is "administrative" costs.

Internet Credit Card Fraud

  • Never make an Internet purchase from a site unwilling to list an address, phone number, and refunding procedures.
  • As with a telephone, do not give out personal data from a source you did not initiate.
  • Auction fraud is the single greatest reported incident. Therefore, make sure you maximize your knowledge of how the auction works, the seller, etc. It may be wise to use a professional payment service such as PayPal.

Credit Reports: There are three credit bureaus and each is required by law to offer one free credit report per year. Checking your credit report allows errors to be corrected to ensure a maximum credit score. But it also assists avoiding identity theft.

  • Be certain to apply for your annual free credit report from AnnualCreditReport.com only. It does not include a credit score but no site offers a FICO score for free unless part of a report security plan with a monthly fee.
  • Print out your report because once you leave the site the free report is not available for another year.
  • When verifying your report, check for accounts you do not recognize or locations requesting your report that you cannot identify.
  • Three reports in one often times will not tell the whole story of what is on each individual credit report.

Credit Card Fraud Procedure

  • Maintain a list of contact points for each account and call if a card is lost, stolen, or fraud is suspected.
  • The law states that once reported, your maximum credit card liability is $50 per card. So reporting is important. Debit cards may have a higher liability.
  • A report should be filed at http://www.ftc.gov/ or call toll-free, 1-877-FTC-HELP (1-877-382-4357).

It's important to know what you're facing when using your credit card. By following these tips and keeping a close eye on your finances, you can avoid being the victim of fraud.

Published 01/13/11 (Modified 07/09/14)

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