When we use them right, credit cards can become our best pals. They’re there for us when we’re short on cash—whether for a quick grocery run, an impromptu dinner, or an impulse purchase.
However, as with most of our personal information, credit card details can also be stolen and compromised. Criminals can directly steal this from you or conduct a data breach on the credit card company.
It may sound bleak—and your worries are valid. Criminals can easily use your credit card number for fraud, especially when conducting online transactions.
We use credit cards, too, so we share the same apprehension. Our fear of fraud is real, so we researched how common credit card fraud is and how we can protect ourselves against it.
We’ve also looked into real stories, read reputable sources on credit card fraud, and asked credit card experts for the best tips to avoid fraud.
Don’t miss out on our top tip to avoid credit card fraud—you may just be one bit of knowledge away from becoming a victim. Don’t let your credit card numbers fall into the wrong hands, so read on.
Credit card fraud statistics: How often credit card fraud happens
From groceries, furniture, takeout, and even Uber, the average American mostly uses credit cards for financial transactions. According to the American Bankers Association, some 365 million credit card accounts were open by the end of 2020 across the country.
Cashless transactions further peaked during the pandemic, so it’s no wonder that people now rely on credit cards to drive the economy.
Unfortunately, convenience and accessibility remain directly proportional to fraud and other risks. With changing consumer habits comes a shift in fraud rates as well.
Criminals have become more sophisticated than ever, so they keep finding ways to breach banks, companies, and users.
1. Credit card fraud rose 44% between 2019 and 2020
According to a report by PreciseSecurity.com, identity theft complaints increased by 45% in 2019. Among the complaints were credit card frauds, making it the leading type of identity theft crime.
Unfortunately, these numbers have risen further since the pandemic. According to the Federal Trade Commission, credit card fraud rose to a whopping 44% between 2019 and 2020, with losses of over $38 million directly tied to COVID-19.
2. Card-not-present is the most prevalent type of credit card fraud in the U.S.
Around 81% of the latest credit card frauds nowadays are card-not-present frauds, and online shopping has opened many opportunities for hackers to harvest consumers’ sensitive information.
3. The U.S. has the highest credit card fraud cases in the world
The United States ranks number one in many aspects, but this one isn’t something to be proud of. A 2019 report stated that the U.S. is the top country wherein these crimes run rampant.
Around 38.6% of credit card fraud reports globally came from the U.S., with losses amounting to $9.47 billion.
4. Americans in their 30s are the most vulnerable to credit card fraud
Criminals usually gather credit card numbers by using certain tools, including fraudulent websites, links, emails, and credit card skimmers. Stolen credit card numbers can also come from data breaches.
The 2019 identity theft statistics on PreciseSecurity state that Americans in their 30s are most vulnerable and exposed to credit card fraud. This is closely followed by consumers in their 50s, and then citizens in their 20s.
What does this mean? As long as you own a credit card, you’re vulnerable to credit card fraud regardless of age.
5. False accounts are more common these days
In 2020, the Federal Trade Commission (FTC) published a study that states that a whopping 88% of credit card fraud cases saw criminals opening new credit card accounts.
What does this imply? It means that rather than trying to get your existing credit card details, most fraudsters would rather open new credit card accounts under your name. They likely use your Social Security Number and other personal information they could easily target.
Common types of credit card fraud
Talking about credit card fraud statistics is one thing, but it’s important to understand that there are various cases of credit card fraud. Here are some of the most common types:
If your card is missing or stolen, you need to report it right away—but criminals don’t necessarily need their physical cards to commit fraud.
How can someone use your credit card without having it? They can do so online or over the phone using your credit card numbers and CVV.
Skimming frauds are common, occurring when a criminal steals details to create counterfeit credit cards.
But how does this happen? They usually use a device attached to either an ATM or a cashier’s terminal that can gather all the necessary details to create a fake duplicate copy.
Today’s cards use two technologies to make payments: the magnetic stripe and the Europay, Mastercard, and Visa (EMV) chip. The EMV chip makes the card less susceptible to skimming.
So, how common is skimming? Fortunately, not as much as it used to be. Skimming fell to an all-time low in 2019, with a 21% decrease in incidents.
Still, skimming is a prevalent crime we should be wary of. It’s best to protect our card details and look for tampering when we’re using our physical cards.
Fraudulent credit card applications
What does false application fraud mean? When an identity thief steals your details, they’ll likely take more than just your credit card numbers—they take your entire identity away, including social security numbers, contact details, and so on.
Criminals can use the details to apply for a credit card under your name and harm your credit rating. From there, they’ll be free to use the credit card as they please, leaving you to take on the financial burden.
What do criminals do with stolen credit card info?
Your stolen credit card details are valuable information—every piece of it. If an identity thief doesn’t want to use it to go on a shopping spree for luxury items, electronics, and other goods, they can easily sell it online.
“What percentage of credit card fraud is online shopping,” you may be wondering? While the numbers are conflicting, we know that stolen credit card cases report fraudsters using these cards to purchase online items, particularly gift cards.
Remember that gift cards essentially have no name or personal information attached. They’re also as good as cash, so they can purchase gift cards from various merchants for personal use or selling online.
How does credit card fraud affect people?
When it comes to debit cards vs. credit cards fraud, the former is more harmful to your finances because criminals steal directly from your bank account. Still, credit card fraud is nothing to shrug off.
Failing to detect credit card fraud allows identity thieves to drive you to financial ruin. They damage your credit scores by purchasing under your name, with no intention of paying for them.
While you can clear your name by proving that you have no authority over the credit card charges, the process may take a while. As the case rolls on, you’ll be left with a damaged financial reputation of missed payments, fraudulent purchases, ballooned debts, etc.
Credit card fraud also takes an emotional toll on many victims. You may feel fear, isolation, guilt, and a wide range of other negative emotions.
Detecting credit card fraud: Can credit card fraud be traced?
Given the biggest credit card frauds in history, and the credit card fraud cases continuously rising, is it truly possible to detect fraud as it happens?
It can be a rigorous process, but it’s possible and necessary. Here are some tips for credit card fraud detection:
- Review your monthly credit statements as carefully as possible
You should review all your purchases, whether you’ve chosen to get copies in the mail or electronic copies. You should report any suspicious or unfamiliar ones to your credit card company immediately.
- Check your credit reports
You’re free to request your reports from the three major credit bureaus (TransUnion, Experience, and Equifax) at AnnualCreditReport.com.
Once you have them on hand, scrutinize carefully and check for suspicious new credits, including loan applications and credit card accounts. Once you see something suspicious, notify the creditor immediately.
What to do if you’re a victim of credit card fraud (and how to report)
Agapay Aaron, an operations staff at credit card processing company Agapay, states, “If you lose your credit card, believe it has been stolen or see a charge that you did not authorize, contact your card issuer immediately. […]
They will then go through your recent transaction history and try to find if there are any other unauthorized transactions. While the […] method may seem as if they are accusing you, stay calm, answer honestly and provide any supporting data that you can.
Their main job is to establish that fraud has occurred. Once that’s established, their job is to protect the cardholder.”
If you receive confirmation that unauthorized people have used your credit card details, you can file a report to the Federal Trade Commission’s IdentityTheft.gov site.
Law enforcement will investigate the case, and your creditors may also advise you to report the crime to local police if you haven’t done so.
Ways to protect yourself against credit card fraud
Sometimes, luck just won’t be on your side, but that doesn’t mean you should sit back and let hackers steal your credit card details. We can’t fully protect ourselves from becoming victims, but we can take some steps to minimize risks—and these are the best ones out there:
- You must not provide your personal details or financial information to anyone. Whether through phone calls, emails, or texts, no reputable person or company will be asking for your social security numbers, credit card information, and so on.
- Skimmed card readers or ATMs usually have sticky keypads. It’s essential to always remain alert, so once your fingers touch sticky buttons, don’t push through with the transaction.
- You should never showcase your credit cards in public. It’s better if you can shield your credit card number and CVV.
- It’s important to dispose of your documents properly. All your credit card statements, financial transactions, and other documents must be shredded or destroyed before use.
- Similarly, never let your mail sit out in the box too long. Never underestimate how easy it is to steal mail and your personal information in it.
Top Tip From An Expert
We’ve saved the best for last—here’s what Ben Michael, VP of Operations at law firm Michael & Associates has to say:
“It’s important to develop a habit of frequently checking your credit card statement. The sooner you can identify a fraudulent charge and notify your bank – the better. Try to check your statement at least once a week.
To prevent credit card fraud from occurring in the first place, make sure to verify the legitimacy of the websites you shop from. You want to make sure that the website is real, your browser is secure, and you are on a private WiFi network.
These days, it is much more common for your credit card information to be stolen online versus in-person.”
Credit card numbers are sensitive information; if they fall into the wrong hands, they can ruin your financial life. For this reason, it’s essential to recognize the importance of vigilance not just online but also in real life.
You can protect your personal information online using various tools and methods, but stolen or lost credit cards can make you even more vulnerable to credit card fraud. As long as you own a credit card, remember that everywhere you go, an identity thief may be lurking near.
You’ve taken the first step of learning, though—just keep the tips and tricks above in mind.