Distinguishing Credit Card Fraud from ID Theft

Identity Theft is a problem we talk about frequently. It’s still the #1 complaint the Federal Trade Commission gets, even after 15 years. “America’s fastest-growing crime” shows no signs of stopping. And now with data breaches affecting millions of users at once, the impact of ID theft has exploded.

Because ID theft typically involves stolen financial information, we offer help and information for consumers who’ve been victimized.

A great place to start is our ID Theft workbook. It’s a free download. It contains over 40 pages of tips and information, and includes the ID Theft Affidavit from the FTC.

Credit Card Fraud

Credit card fraud and ID theft are often used interchangeably. Credit card fraud is in fact a kind of identity theft. Someone must pose as you to use your credit card fraudulently. But while this kind of crime is technically ID theft, the steps to recover are different.

With credit card fraud, the thief typically doesn’t have any of your personal info; no Social Security Number, no date of birth, etc. They have one piece of information—your credit card number.

Because credit card fraud only involves one unique number, the solution is to change the credit card number. Your creditor will do that for you, rendering the stolen card unusable. Then there’s the matter of clearing up any fraudulent charges.

By law, you have a maximum of $50 in liability for unauthorized credit card transactions. It is fairly rare that a creditor will actually make you pay this $50. They will usually close the account and reverse any unauthorized charges. If you report the card lost or stolen before it is used to make purchases, you have no liability.

It’s a bit different for ATM/debit cards. If you report your debit card missing or stolen before any fraudulent withdrawals/charges are made, you have zero liability, no matter how much is taken. If you report the theft within 2 days of learning about the fraud, your liability is legally limited to $50. After 2 days, your liability under the law goes up to $500. That’s why it’s important to report debit card fraud immediately. Remember this time limit is for when you learn about the fraud, not when it happened. So if you had a fraudulent debit card transaction 3 weeks ago, but you didn’t know about it until you got your bank statement yesterday, you are still within the 2 days and your liability is capped at $50, not $500.

If you go more than 2 months from receiving your bank statement without addressing the situation or reporting the crime, you liability is potentially unlimited, and you could have to repay everything taken by the thief.

If someone uses your debit card number to make an unauthorized transaction, but your card is not stolen or missing, then you have no liability at all if you report the transactions within 60 days of getting your credit card statement. Basically, you have less time to report the crime if your ATM card itself is stolen. There is more leeway if your number was copied or hacked and you had no way of knowing you had been compromised.

Fraud Recovery

If you’ve been victimized by credit card fraud, step one is to call your credit card company. They will take care of changing the credit card number and issuing you a new card. In most cases, that’s all that will need to be done.

From that point, you’ll want to keep an eye on your credit reports to make sure no new accounts show up. Visit Annualcreditreport.com and get a free copy of one of your credit reports (no need to buy a credit score). Then wait a month or so and get one of your other reports (so start with TransUnion, then Equifax, etc.). This way you can catch new accounts that are opened later by a thief. If a new, unfamiliar account is opened in your name, then your case goes beyond credit card fraud to true identity theft, and you’ll have more work to do.

Avoiding Fraud

  • Be careful with your credit cards. Much of the crime isn’t stealing your physically card, but just stealing the number on it, whether by copying it down at a restaurant or through a data breach/hacking incident.
  • Don’t give out your credit card number to anyone who calls you. Make sure it is you who initiated the call and you know with whom you’re dealing.
  • Check your credit card statements promptly to ensure every charge is legitimate. The same goes for your debit card; so check your bank statements as well.
  • Create strong passwords for your online accounts and never reveal them to anyone.
  • Check your credit reports annually and look for signs of fraud. You can get each of your 3 credit reports for free every year, so you could get one free report every 4 months.
  • Copy your account numbers, expiration dates and phone numbers for your credit cards and keep them somewhere safe. That way you can quickly report them lost or stolen if necessary.
  • Don’t leave any blanks on receipts where the total amount can be changed.
  • Shred old statements and old cards before disposing of them.

If your identity has been stolen, check out our free guide. If you have trouble with credit cards or other debt, call us today for free, confidential counseling and expert advice.

Speak to our certified Debt Coaches to review all of your options and discuss best strategies for getting out of debt.Speak to our certified Debt Coaches to review all of your options and discuss best strategies for getting out of debt.
Melinda Opperman

About The Author

Melinda Opperman is an exceptional educator who lives and breathes the creation and implementation of innovative ways to motivate and educate community members and students about financial literacy. Melinda joined credit.org in 2003 and has over 19 years experience in the industry.