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Updated: December 27, 2000
Preventing Credit Card Fraud
Learn how to protect yourself
A brochure that describes how crooks steal and use credit cards and card numbers, and also describes how to protect your card and what to do if your card has been stolen.
- This publication is not currently associated with any training series.
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Table of Contents
Would you give a strangers the keys to your home?
Of course not — not if you care about your safety, or the security of your belongings.
Guard your credit card or card number just as carefully. A thief who has your card or card number and expiration date can charge thousands of dollars to your account in a matter of minutes.
Credit card fraud costs businesses billions of dollars a year, huge losses that we all pay through higher credit card charges. Fortunately, credit card fraud is one of the most preventable forms of robbery.
About credit card fraud
Most credit card crime involves lost or stolen cards. Thieves can get your credit cards by stealing your wallet or burglarizing your home. Crooks also pay store employees for customers' card numbers and create bogus cards to resell on the black market.
Credit card thieves don't have to have the credit card itself to rob your account. If they find a sales slip with your account number and expiration date, they can take advantage of your account.
I left my credit card overnight on my desk at my office. Paul later found a charge for a $1,300 computer he hadn't ordered on his credit card bill. He called his bank and discovered that someone had ordered the computer and had it sent to an unfamiliar address.
Crooked telemarketers may call you with tantalizing offers of discounted merchandise or tell you that you've won a prize. They'll ask for a credit card number for "shipping charges" or for some other phony reason. They may send you shoddy or worthless items or charge your credit card account without sending you anything.
Sometimes crooks hang around payphones trying to overhear you say your account number when you place a call using a credit card.
It took a thief just a few minutes to grab my card and use it. Pam went to lunch at a restaurant. When it was time to pay, her purse was gone. She rushed to a phone to call her credit card issuer, and found to her amazement that the card had already been used by the thief.
Credit card crooks also steal cards from mail-boxes or mail centers, before you even receive them. As a protection, most card issuers now require that you call from your home phone to activate the card before you use it.
Credit card fraud has popped up on the Internet, although fortunately it has not become widespread because most retail web sites use a "secure" mode for transactions. This means that they scramble the credit card numbers to disguise them before they are sent through the Internet.
How to guard your card
- Carry only one or two cards so if you lose them or are robbed, you have fewer to report missing.
- Write down the toll free numbers for reporting your credit cards lost or stolen and keep the number at home, in your purse or wallet and at your office so that you will be prepared to call immediately if you have to.
- Never leave your purse or wallet unattended in public. Keep an eye out for pickpockets.
- Always check that you get your card back after you make a purchase.
- At home, keep your cards in a safe place that won't be obvious to burglars.
- Always sign your card in ink as soon as you receive it.
- Never lend your card to anyone. If you want to let someone else use your card to buy something, handle the transaction yourself.
- Keep track of when new and reissued cards should arrive, and call the credit card issuer if they don't come on time.
- Make sure your mailbox is secure, and that only you and the postal carrier have access to it.
- Tear up all credit card receipts and preapproved credit card offers into tiny pieces before you throw them away. Keep your billing statements in a safe place.
- Before you send your card back to the issuer to close your account, cut the card in several pieces.
- When you use your credit card online, make sure you are using a secure web site. Look for a small key or lock symbol at the bottom left of your browser's window.
- Never give your card number to strangers or telemarketers who call you on the phone.
Keeping away from trouble
If untrustworthy people get a hold of your card number and expiration date, they can charge merchandise over the phone to your account, or even order new credit cards in your name.
The lady on the phone said I was sure to win a car. Jean gave her credit card number to a telemarketer who convinced her that she could win a new car. On her next credit card bill she found $400 of unauthorized charges.
Identity theft is a widespread crime in which crooks use your personal information, such as name, address and Social Security number to set up fraudulent credit accounts in your name.
Never give your card number to strangers who call you, no matter how legitimate they seem. You can never be sure that an unknown telemarketer is honest. Don't give your card number unless you initiated the call.
Don't leave correspondence, receipts or statements with your credit card number lying around your office or home for someone else to read. Know when you're due to receive a statement, and call your credit card issuer if it doesn't arrive on time. A thief can get your credit card number off your billing statement.
Keep a complete list of all your credit card numbers in a safe place. (Never carry the list in your wallet). This will make it easier for you to quickly report a lost or stolen card.
Keep receipts from all credit card purchases. Always check your monthly statements against the receipts, and look for any charges you didn't make. This is the best way of making sure no one else is using your credit card number.
Never write your card number on a postcard or on the outside of an envelope.
Don't let merchants write down your card number as confirmation on checks. It is illegal in many states for merchants to require credit cards as identification when you pay by check.
Memorize your personal identification number (PIN). Your PIN is the secret code you use when making a cash withdrawal from an automated teller machine (ATM). Don't write down your PIN on the back of the card or keep it in your wallet. Keep a copy of the number in a safe place at home. Don't use the same PIN for all your cards, and don't choose your birth date or other easily identifiable number that might be on something else in your wallet.
If someone calls claiming to be a bank representative and asks for your PIN, don't give it. Report the call to the card issuer and police.
Shield your credit card or calling card when you make a long-distance call from a public pay telephone. Also shield the phone keypad when you enter your card number. Be sure you cannot be overheard when you say your card number to an operator.
Lost or stolen cards
When you first realize your card is missing, act quickly to report it.
Keep the phone number of your card issuer at the office or in an address book you carry with you, as well as at home, so you can call without delay. If you don't have the phone number, call toll free directory assistance to find it. (See "Where to get help.")
To protect your rights, you must report the loss or theft of your card as soon as you realize the card is gone or has been used without your permission. Federal law limits the amount of money that you can lose as a result of fraudulent use of your credit card.
If you notify the issuer before the card has been used, you will have no responsibility to pay for unauthorized charges. If the card has been used fraudulently before you notify the credit card issuer, you may be required to pay for up to $50 per card for those charges.
It must have been that receipt I left at the electronics store. Carlos returned a radio to a store, but accidentally left the credit card receipt on the counter. When his next statement arrived, he found hundreds of dollars of unauthorized charges. Someone had picked up the receipt and used the card number on it.
If your account number but not the card itself was used illegally, you're not liable for any amount.
Don't use your credit card after you have reported it lost or stolen.
After you've called to report the problem, be sure to follow up with a letter to the issuer, explaining that an "unauthorized charge" was made. This paper record of your notification can also limit your liability.
Call your credit card issuer immediately if you see anything suspicious on your bill. You could help the company uncover fraud—and save yourself from paying unauthorized charges.
Consumer Action originally created this educational publication with the support of Visa U.S.A. Inc. It was revised in January, 2000, with funding from the San Francisco Foundation's Bank of America Consumer Education Fund (BACEF).
Copyright 2000 Consumer Action
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Where to get help
Call your credit card issuer as soon as possible to report your card lost or stolen. Also call whenever you have questions about your account. Most credit card issuers have toll-free numbers available from directory assistance at (800) 555-1212.
Call the police to report any theft or criminal activity.
To report telemarketing fraud call:
- The National Fraud Information Center: (800) 876-7060
- The Federal Trade Commission: (877) FTC-HELP
- Your state attorney general's office or your local district attorney's office. Check your local phone book for the numbers.
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