What Happens to People in Credit Card Fraud?

Credit card fraud is a major fear among American consumers. The 2009 Unisys Security Index survey found that 65 percent of respondents are either "very" or "extremely" concerned about being victimized by credit or debit card fraud. Many do not know what happens if their information is stolen or how to handle the situation.

Types

Credit card fraud comes in several different varieties. Criminals sometimes get credit card numbers and use them for online purchases until they hit the credit limit. Some use skimmers, electronic devices attached to ATM machines or gas pump card readers, that steal the information on a card's magnetic strip, according to the Better Business Bureau. This allows creation of a duplicate card. Identity thieves use personal information to open unauthorized credit cards in the victim's name.

Effects

Credit card fraud affects the victim's finances and credit reports, according to the Federal Trade Commission (FTC). Consumers may have their purchases declined because criminals have spent all their available credit. If they have automatic payments to utilities or other firms set up on the compromised credit card, those payments will also be declined. Victims of identity theft may unknowingly have credit reports riddled with defaulted accounts opened by thieves, then abandoned when the credit limits are reached. They may even get collection calls for bills that do not rightfully belong to them.

Detection

Consumers can often catch credit card fraud early by monitoring their billing statements. Everyone gets a monthly statement, but many banks let their customers view transaction information at any time online. Look for strange charges and report them to the card issuer immediately. The FTC states that people can monitor their credit annually for free to watch for unfamiliar accounts. Annualcreditreport.com provides no-cost copies of TransUnion, Equifax and Experian credit files every 12 months upon request.

Solution

Fraudulent charges and accounts should be reported immediately. Credit card companies will reverse fraudulent transactions, close the compromised account and issue a new number and card. Companies that have issued unauthorized accounts to identity thieves will close them and remove the information from the victim's credit reports. The Privacy Rights Clearinghouse advises victims to place fraud alerts on their credit reports. It is only necessary to alert one credit reporting agency, as the law obligates it to notify the other two. Alerts remain in place for 90 days and warn lenders not to open new accounts without careful verification.

Considerations

Credit card fraud is sometimes an ongoing issue as criminals repeatedly try to open new accounts. The FTC explains that consumers have the right to extend fraud alerts for seven years if they submit police reports proving they were victimized. Extensions must be requested individually from TransUnion, Experian and Equifax.

References

• Unisys: Unisys Security Index Reveals High Concern Among Americans About Government and Business Protection of Private Data
• Privacy Rights Clearinghouse: Identity Theft, What to do if it Happens to You
• Federal Trade Commission: Your Access to Free Credit Reports
• Federal Trade Commission: Defend, Recover From Identity Theft
• Better Business Bureau: Debit and Credit Card Skimming is on the Rise

Resources

• Annual Credit Reports