Credit Card Fraud Protection

Credit card fraud has had a devasting impact on the economy, totaling several hundred million dollars of losses annually in the United States, but the increasing use of credit and the proliferation of card-not-present transactions by mail, over the phone, and through the Internet has made credit card fraud a growing risk to both consumers and retailers. The threat is limited, by having good protection processes in place like the personal identification number (PIN), and authorization codes, those three-digit numbers on the backs of cards. Identity theft and higher prices at the checkout are the largest affects on consumers.

How Credit Card Fraud Happens
When it happens to an individual, credit card fraud is one of the worst outcomes for a consumer. Credit card fraud thieves can obtain credit card information in numerous ways, from picking through garbage to obtain credit statements, to high-tech skimmers which work like normal card scanners but store hundreds of card numbers that pass through them. Email phishing, which attempts to solicit credit card information is another typical source. Once the card number is obtained, a copy of the physical card can be made, or the numbers can be simply be used in any number of card-not-present transactions, with gas station pumps and online retailers tending to be among the most popular targets respectively. Though U.S. laws limit the liability of an identity theft victim to $50, the burden of proving theft and the hassle of replacing compromised credit cards can be significantly bothersome and may complicate an individual’s credit score for several years.

Credit Card Fraud Impact
When credit card fraud is identified, the losses to retailers and credit card lenders often well exceeds the liability that is immediately shouldered by the card holder. Though these businesses absorb the initial expense, the costs are ultimately passed back to the consumer as higher prices for everyone. Credit cards accomplish this through higher interest rates and membership fees, or by charging back the amount of the fraud to the merchant. Retailers have little choice but to simply raise their prices. Annually, fraud adds up to anywhere from 10 to 20 cents on every $100 spent, and these amounts are already reflected in prices and rates. As consumers tighten their belts during this recession, fraud may not abet and may actually increase, putting additional strain on the economy. And, since the cost of investigating individual cases of credit card fraud is often higher than the cost of simply writing off the loss and passing off the expense to consumers, there’s little incentive for credit lenders to implement more rigorous fraud protection mechanisms.

Credit Card Fraud Protection Tips

Credit card Fraud victims lose a great deal of time, money and peace of mind. In addition, it can take years to repair damaged credit and your good reputation. Therefore, it is wise to take a few simple credit card fraud protection steps to protect yourself as much as possible before it happens.

  • Keep an eye on your mail. Know when your credit card statements come; pay attention to your finances; obtain a copy of your Equifax 3-1 credit monitoring reports; and make sure you check for fraud regularly.

Comments are closed.