Credit Card Fraud On The Rise: Are You Protecting Yourself?

In recent years, new digital payment technology and card advancements have been created in hopes of disrupting the rising rate of credit card fraud. However, the truth of the matter is, no matter how advanced our prevention measures become, criminals will do anything to work their way into stealing even the most protected data.
This article is aimed at giving insight into what credit card fraud is, how to avoid credit card fraud, and how to protect your data from financial crime.

What is Credit Card Fraud?

Credit card fraud is when a payment is made with a credit or debit card without authorization from the cardholder. Unauthorized users steal a payment card or its digital information to purchase goods or services. Criminals can also use this card information to transfer funds to their personal accounts.
Some forms of credit card fraud include:

  • Cloned cards
  • Unauthorized in-person transactions
  • Card-not-present schemes
  • Account takeovers
  • New accounts fraud

Who is Affected By Credit Card Fraud?

Credit card fraud is a global concern. However, speaking more closely to home, millions of Americans become prey to financial criminals annually.

Credit card fraud not only costs a cardholder, but it also costs their issuing banks, credit card networks, and the federal economy billions of dollars every year.

On the plus side, many fraud cases can be disputed. Which means a cardholder would not be held responsible for unauthorized charges. However, someone must take on the liability.

Typically, it’s a financial loss for merchants, banks, and credit card companies. This causes a snowball effect, which can take a damaging toll on the economy as a whole.

Credit Card Fraud Statistics

According to a recent annual report, about half of all Americans have fallen victim to credit card fraud. Out of those 127 million Americans, ⅓ had also experienced fraudulent charges numerous times.

With how common credit card fraud is, it is best to know what you are up against and how to better protect yourself. The below statistics from researchers can better help you understand the severity of financial crime and how Americans are impacted.

  • Americans aged 30-39 are the most affected by credit card fraud.
  • Only just over half of businesses are “somewhat confident” that they could spot fraudulent activity when it is occurring.
  • Over 77% of US merchants sell products online. By next year, these merchants will lose around $130 billion annually on card-not-present transactions. Especially if preventive measures are not strictly enforced.
  • Fraud from card-not-present transactions is 81% higher than in-person point-of-sale transaction fraud.
  • Credit Card fraud is estimated to cost the global economy around $50 billion in 2030.
  • The United States is victim to nearly 40% of all fraud globally.
  • Every 2 seconds an American is victimized by credit card fraud.
  • EMV chips have helped reduce fraud by 76%.

How Does Credit Card Fraud Happen?

Credit card fraud happens when payment data is accessed by anyone who has mal intent to use the data to purchase goods or services without the cardholder’s permission. Credit card data can be stolen in many ways. Knowing the most common ways criminals access private data can better prepare you for keeping your information safe.

Phishing Emails

Phishing emails are as the name implies. Criminals use urgent-looking emails or emails from a familiar-looking party as bait to catch and prey on unsuspecting victims. Phishing emails are crafted to trick readers into clicking on a link that will redirect them to a webpage that looks safe or official. This website will then convince victims to enter their personal information including credit card data.
Incoming call on iphone screen

Phishing Phone Calls

Phishing can also occur by way of phone. A scammer will call or leave a message saying the cardholder needs to call their bank, social security office, or another official entity urgently. And provide them with the phone number to call. Once the user calls, they will then be prompted to supply personal data, including credit card information to “confirm their identity”

Virtual Kidnapping Ransom

The FBI has issued warnings of virtual kidnapping ransom scams. These scams occur when a phone call is issued to a victim stating their loved one is being held captive. They may even have someone screaming in the background to make the call seem more legitimate. This is usually a scam.

Next, the caller will request money to be wire transferred or credit card information to be sent as ransom. If the callee agrees to send the requested money, the caller may then demand additional payment claiming they never received the first transfer. This type of scam usually targets older generations who are least suspecting.

Spyware

Hackers can attempt to steal your personal information and credit card data stored on your computer or smartphone. They will send emails with links or attachments that when opened, will download spyware.

Spyware is a virtual virus that can export stored information on your personal device to the hacker’s device. Always be vigilant and avoid clicking on unfamiliar links or attachments. And remember to equip your devices with antivirus software protection.

Public WiFi Networks

Public WiFi in areas like airports, stores, and hotels can easily be monitored. If a cardholder is shopping online, enters their credit card information, or opens private files, this data can be at risk of theft.

Installing a Virtual Private Network (VPN) can protect your information from public networks. VPNs encrypt online identities and data which makes it more difficult for cybercriminals to gain access to your information.

Hacker typing on a keyboard