Credit Fraud Alert: How to Avoid Credit Card Fraud

Closeup image of a woman holding and choosing credit card to useCredit fraud can happen to anyone. It costs the victims time and money, and the perpetrators often escape without consequences. It’s a tough crime to prevent, and can be even tougher to enforce.

The best thing you can do to prevent credit fraud is to be vigilant about theft. There are many different types of credit fraud and identity theft, from stealing your wallet, to rifling through your trash, or compromising your online accounts.

Because each of us must take responsibility for protecting ourselves from this kind of crime, we’ve put together 10 tips to avoid credit fraud:

1. Protect Your Credit Cards

It’s important to handle your credit cards with care. Anyone who gets their hands on your card can copy or photograph the information they need to commit fraud.

Don’t carry all of your credit cards at all times. You don’t want everything to be compromised at once if your purse or wallet are stolen or lost. It’s not such a bad idea to have more than one credit card, but don’t sign up for too many credit cards, especially all at once.

When using your credit card, keep an eye on it. Don’t walk away from a merchant without getting that card back under your control. And when using your credit card in public, don’t leave it out in plain sight—a thief only needs to snap a quick photo with a smartphone and they’ve got your number.

Learn More: Should I Sign My Credit Card or Write “See ID”?

2. Read Your Credit Card Statements

It’s important that you know how to read your credit card statements every month. This is often the first sign you’ll get of credit card fraud at work. If you see any unfamiliar transactions, follow up on them and contact your creditor right away.

This is especially important during the holiday months. Many thieves count on people to be doing a lot of shopping during the holidays, so they hope their fraudulent transactions will be overlooked among the many other purchases that their victims are making.

It’s also important for your financial health to be reviewing your statements every month so you can see how much you are spending and where the money is going.

3. Shred Your Documents

After you’ve reviewed your statements and paid your bills, you need to file them away securely or shred them. Never throw anything away with personal information on it; “dumpster diving” is a common way for identity thieves to get their hands on someone’s data.

The FTC published “A pack rat’s guide to shredding”, which talks about which documents to save (birth certificates, home & auto titles, marriage licenses, etc.) and which to shred immediately (ATM receipts, credit cards statements, utility bills, etc.). In between are documents you’ll want to keep for a set period of time before you shred them (like tax records).

It’s important not to assume that a document won’t be useful to a thief. We’ve seen cases of stolen credit card offers being filled out fraudulently, so even junk mail can leave you vulnerable. And correspondence from your kids’ school might have their information on it, and thieves will happily steal a child’s identity to commit fraud.

4. Avoid Phishing

Phishing communications are intended to trick you into providing a password or some other information scammers need to access your accounts.

These phishing attempts often take the form of fake communications from your bank or an online store. Anything telling you to take action immediately is suspicious—phishing attempts are often designed to scare you into acting without thinking.

To avoid phishing, start by keeping your computer and smartphone secure. Update regularly to the latest operating system, and use security software if necessary. Be very careful about clicking any links in an email or responding to a text message from someone you don’t know.

If you get a phishing email, forward it to spam@uce.gov.

5. Shop Safely Online

When buying online, you are taking a risk with your information. Even if you do everything right, the company you’re buying from could suffer from a data breach that might include your information.

You can lower your risk by taking some precautions. For one, buy from vendors you trust and can verify. An unfamiliar site with rock-bottom prices is not worth the risk. Also, use a credit card, not a debit card, so you will have extra protections against fraud.

Save your payment receipt, and watch out for the delivery date. If you don’t get the goods as promised, take action right away to dispute the charge.

6. Check for Malware

Malware takes many forms, not just viruses or trojan horses. Malware can also be adware, which is designed to redirect your online search traffic to deliver ads and capture your browsing information.

Once one piece of malware gets installed on your computer system, you will start getting more. The first infection usually “holds the door open” for more malicious software. Scan and remove malware with a reputable security application.

7. Check Your Credit Reports

If a fraudulent account is created in your name, you might never see the statements. Only your credit report will reveal to you that someone is using your identity to open new accounts. Check your credit reports annually and look for anything unfamiliar or suspicious.

More Resources: How to Get Your Free Annual Credit Report

If your information has already been compromised, or you’re mystified by what you see in your credit report, get a credit report review so you’ll fully understand everything in your credit report and what to do about it.

8. Beware of Skimmers

A “skimmer” is a device attached to a credit card reader. It scans the credit card you enter to gather your card information while you complete your legitimate transaction. Usually, these skimmers are attached to ATMs and gas pumps.

If the credit card reader is loose and you are able to “jiggle” it, don’t swipe your card there. Look out for a reader that seems to protrude too far from the ATM or gas pump.

credit card skimmer
(Photo Credit: Kamloops RCMP)

You’ll also want to be careful of the PIN pad. Thieves might put a second PIN pad on top of the first, so they can capture your PIN. Another tactic is to set up a camera to record which numbers you press, so always protect your PIN, even when there’s no one else around.

Keep an eye on your card at all times and check your statements to be sure you haven’t been skimmed.

9. Freeze Your Credit

A credit freeze makes it harder to open new accounts. Harder for you, and especially for identity thieves.

When you get a credit freeze, your credit report will be inaccessible until you lift the freeze. That means a creditor will not be able to check your credit report, and any application for credit in your name will almost certainly be denied.

You can request the freeze be lifted if you intend to apply for new credit. You’ll do that online or by phone; you will have to know a special PIN that the credit bureau provides to you in order to lift the freeze, so do not forget this PIN and keep it safe.

Be aware that a freeze won’t stop potential employers, landlords, or your current creditors from seeing your report. Only applications for new credit will be affected, so you should continue to monitor your monthly statements for suspicious activity.

Getting a credit freeze is free, as is temporarily lifting the freeze. A credit freeze is different from a fraud alert, which you should only need if you’ve already been an ID theft victim.

To place a freeze on your report with Equifax, call 800-685-1111 or visit www.equifax.com/personal/credit-report-services/. To freeze your Experian report, call 888-397-3742 or visit https://www.experian.com/help/. And to get a freeze with TransUnion, call 888-909-8872 or visit https://www.transunion.com/credit-help.

To learn more, check out the Identity Theft Prevention materials in our FIT Academy.

10. Don’t Fall for Credit Repair Scams

There are legal and legitimate ways to improve your credit, but credit repair is not one of them. Don’t let a scammer make you into a criminal by participating in a credit repair scheme.

You can legally take steps to make sure your credit report is accurate and up to date, and figure out targeted strategies to quickly improve your score. Credit repair scammers promise “quick fixes” that may only be temporary, if they do anything at all.

If you use a credit repair firm to remove legitimate information from your credit report, you’re committing credit fraud, and the negative information will not be removed, or will be quickly re-added to your report. The best a credit repair outfit can do is temporarily (and illegally) boost your score, all while charging you hefty up-front fees.

To find out more about legally and legitimately improving your credit without resorting to credit repair, check out our free Consumer Guide To Good Credit.

If you are concerned about your credit, whether it’s fraud-related or managing your debt, professional help is available. Credit coaching can help you assess your situation and create a plan to take control of your personal finances.

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.