Most Common Credit Card Scams & How to Avoid Them
The credit card has become a popular currency in the modern world. But with the rise of credit card use also comes the risks of scams and fraud. And even now with the taunted safer EMV chip credit cards that replaced magnetic stripes cards, scammers, hackers and frauds are still able to find ways to execute their malicious plans.
The modus on credit card frauds and scams range from simple to sophisticated. That one time you ate at a restaurant and the waitress took away your card for a quick swipe can be the perfect opportunity to copy your credit card details.
When you gave away card details to an unsafe website or a person pretending to be from your bank to validate or confirm personal information was perhaps the chance these scammers were waiting for. Even those tiny bits of information hackers found on social media, billing statement and other official correspondences might have been their key to altogether steal your identity.
You may not know it these scammers may have been using your credit card information for a long time now. It can go on and on incurring significant damage to your account unless you become more aware and vigilant of your financial activities.
Here are their common methods you need to be aware of so you can be more alert next time.
Types of Credit Card Scams
Identity theft and Account Takeover
One of the most common and alarming credit card frauds is identity theft. In this case, scammers can obtain bits and pieces of information to re-create your identity, apply for a new card and then make charges without your knowledge.
Stealing your identity doesn’t have to employ very sophisticated tactics. These hackers and scammers feed on readily available information about you: your birthday, city and high school address in your social media. They may also find your account numbers on mails and billing statements you left lying in the trash. They just need to piece all these data together, and they can come up with your clone.
Next, they’ll apply for a new credit card using the re-created version of your identity and then ask the bank to send the new or replacement card to your “new” address. Once they get the card, they can do anything with it.
What You Can Do:
- To prevent your identity from being stolen, be careful about what you post online. Don’t give out sensitive information such as your complete birth date, precise location, driver’s license number, social security number, and bank account details.
- Secure all your billing statements in a safe place or shred them. It’s also essential to regularly monitor your credit report, so you’ll know if a new account has been opened in your name.
Lost and Stolen Credit Card Scam
Scammers can obtain your card in a variety of ways. You may have lost your card and fell into the hands of criminals. Or, your card may have been stolen from you. Either way, once your card is not anymore in your possession, the scammers can use it to make unauthorized purchases. Although they cannot swipe the card in machines as they would need the PIN, but they can still shop at online stores, for instance.
Fortunately, you will not be held entirely liable to these fraudulent charges. Most credit issuers offer fraudulent protection wherein you only have to pay $50 for any fraudulent charges, regardless of the total bill. There are even credit issuers who provide zero liability as long as you report the card missing or stolen before a charge was made.
What You Can Do:
- It’s essential to report that your card was missing or stolen the soonest time you notice it. Call or visit your credit issuer right away.
- It is also important to notify any one of the credit bureaus of the incident, and they will alarm the other two.
- It may be recommended to freeze or close down your account entirely and request for a card replacement.
If you run a business accepting credit cards as a form of payment, you may be vulnerable to the fake technician scam. In this modus, a person pretending to be a technician will come to your store or establishment to replace old and damaged credit card machines. But without you knowing, the technician may slip something into the device so that they’re able to capture the credit card data of your customers. The technician looks innocent enough, but in no way is he connected with the real processing provider. Once they get the data they need, it would be easy for them to create new card with the same details or overwrite the existing one.
What You Can Do:
Be wary of anybody who comes close and uses your credit card processing terminal. If you need a technician to come by, make sure that it comes from the real processing company you contacted.
Jury Duty Scam
When you’re called for jury duty, you have no choice but oblige. But what if you never receive any notification for jury duty and local court claims that they have sent you one? You fear for an arrest taking place, and this is where scammers make the most of your fear.
With jury duty scams, someone from your local court shall call you informing that you have failed to oblige to your jury duty. They will insist that they had sent you a summon when all the while they didn’t. The con artist goes on to say that you have a pending warrant. By now, the scammer senses your fear and tells you that you can settle the matter by verifying certain information.
At this point, they will ask for social security number, bank account, and credit card details. The worried victim readily hands out the information, which then becomes instrumental for the scammer to commit credit card fraud and identity theft.
What You Can Do:
- Remember that if you’re ever called for jury duty, you will certainly receive a summon via the US mail.
- The federal government will never ask for personal and sensitive information.
- If you receive a suspicious call or email from someone pretending from your local court about missing your jury duty, hang up and don’t respond. Report the incident to the authorities right away.
- Visit the local court to verify if there are indeed charges against you.
EMV Card Scam
EMV cards have become the universal standard for credit cards and debit cards as they’re more secure against frauds than cards with magnetic strips. Banks and credit card issuers are continuously rolling out new EMV cards to their cardholders, and this is where scammers try to take their opportunity for identity theft.
Basically, the scammer sends you an email, posing to be from the bank or credit card issuer, telling you that you can only redeem your new EMV card if you update your personal information in your system. The email may contain links redirecting you to a bogus website. When you enter your information here, the scammer can then use it to steal your identity.
What You Can Do:
- Remember that a legit bank or credit card issuer will never request for personal information over email.
- You will receive your new EMV card without updating any information.
- Visit your bank or issuer’s official website for details on how to obtain your EMV card. Never click or enter any information you receive in your email.
Fraudulent Charges on Your Account Scam
Your credit card issuer will most likely notify you if there are potential fraudulent charges on your credit card account so you can take the necessary measures of protecting your account. However, scammers also use this same scenario to actually perform a real fraud.
The scammer acts as someone from your credit issuer and tells you that they’ve noticed suspicious charges on your account. The scammer may already have some of your information to convince you that they are the real deal – name, date of birth and location. At this point, they ask for additional information to confirm whether fraud has taken place, and that includes your credit card’s security number. Once they get the information they need, they can now use it for identity theft and other forms of fraud.
What You Can Do:
- If you do receive a phone call from your credit issuer regarding potential fraud, never give out sensitive information. Visit the issuer’s office or call their hotline indicated at your credit card to make sure you’re talking to the right person.
- Constantly monitor your credit activity to ensure that no suspicious charges are taking place. If there are, report the incident right away.
Hotel Front Desk Scam
You probably wouldn’t imagine getting scammed while on vacation, but a lot of hotel guests have been victimized by fake phone calls allegedly coming from the front desk. The scammer’s motive was to get you to give out your credit card details.
The scam plays out like this: you sleep soundly late at night or early in the morning in your hotel room and your hotel phone rings. The caller claims to be someone from the front desk, telling you that they have a glitch in their system and that they need your credit card details right away to finish their audit. The caller sounds convincingly apologetic and may even offer you with a discount for the inconvenience. He asks you to hand over the card details over the phone, or you could come downstairs to the front desk.
But it was very early in the morning, you were frazzled and sleepy, and you didn’t want to go down. The only means to resolve this issue was to simply provide the information over the phone.
Before you know it, your account has been compromised and the scammer can use the information to make fraudulent charges.
What You Can Do:
- Never give away your credit card details over the phone, especially if you didn’t make the call in the first place.
- If there’s indeed a system glitch, it’s much safer to just go to the front desk to verify the issue.
Free Wi-fi Credit Card Scam
Using public wi-fi may sound harmless enough especially if you’re just looking for information, such as a nearby restaurant or best tourist destination. But nobody says it’s safe. In fact, using the public wi-fi can do more harm than good particularly if you’re transmitting sensitive data like your credit card information.
This scam is very common, and a lot of people don’t notice or are not aware of it. It’s more rampant in airports and public cafes because people are looking to connect to internet quickly and without paying any fee. The scammer opens an unsecured wi-fi spot where you can’t connect without a password. If you happen to be transferring money from one card to another or checking out your account balance, the tech-savvy consumer can intercept the information quite easily and use the data for identity theft.
What You Can Do:
- Never open credit and bank account-related in an unsecured network. If you need to connect, it’s better to load up your data and use your smartphone.
- Make sure that all the security features in your smartphone are up-to-date.
- Use VPN when available. VPN makes communication a lot more private.
Credit Card Skimming
Swiping your credit card may have been a typical part of your shopping adventure, but this very act can leave you vulnerable to thieves. Credit card skimming is the modus wherein thieves implant a skimming device to capture and store all your credit card information. Most of these take place in ATM’s, pump stations and even restaurants you like to frequent. In some cases, retail workers are even hired by large syndicate groups to process the transaction, and subsequently, steal your information.
Unfortunately, most of these skimming devices blend seamlessly with the credit card terminal. In some cases, the thieves may also implant a tiny camera to capture your PIN code. Once they get the information, you can become a victim of identity fraud or use your data to make counterfeit credit cards.
What You Can Do:
- Don’t use a suspicious looking terminal. If it makes a sound when moved or has some parts protruding from it, it’s likely to be tempered. Use another terminal or pay with cash instead.
- Don’t let your credit card get out of sight. If it needs to be swiped, it should be done in your presence.
- Cover the ATM keypad as you type in your PIN code.
- Withdraw or transact money at your bank’s ATM. Thieves are more likely to place skimming devices in standalone ATMs.
- Look for any sign that the terminal has been tempered with. For instance, gas station terminals often have security seals which are written against a dark background. If the seal was tempered with, the security seal appears against a white background. Don’t use it.
How to Avoid Being a Victim
The credit card is a trusted currency because you can use it online and in-store. However, thieves and scammers are becoming very savvy at tricking people into handling their credit card details. They employ technological-savvy methods, are very convincing and may even use your fear or panic to get what they want from you. You may only notice that you have been victimized after seeing the fraudulent charges on your credit card account.
While the scammers are being wiser each day, you can be one step away from their tricks by being more aware and vigilant. Here are more ways to avoid becoming a credit card scam victim:
- Affix your signature as soon as you get your new card. It’s so much harder for crooks to forge or even erase your signature should you lose your card or gets stolen.
- Assign a separate location for your credit cards, away from your cash. This is a safety measure because most thieves target wallets knowing that it contains both your cards and cash. If your wallet should get stolen, you still have your credit card somewhere.
- Keep your credit card in view while the waitress or cashier swipes it.
- Save and store all your receipts.
- Destroy receipts and statements containing account information. Don’t leave them lying in the trash for people to see.
- Never hand out credit card information over the phone, unless it was you who made the call and you’re talking with the right person.
- Reconcile your receipts and billing statement regularly. Report any suspicious activity as soon as possible.
It’s frustrating to become a victim of credit card scams and gimmicks because of the impact it can create on your credit score and reputation. Fortunately, you can protect yourself in a variety of ways, and it starts with becoming an educated card user. If you receive an offer that sounds to be true or got an email or phone call about updates or breaches on your account, verify the information with your card issuer first. Crooks feed on consumers who panic or are too frazzled to act rationally, so stay calm but vigilant.
Cary Silverman is a consummate entrepreneur having sold multiple companies during his 20 years of business experience in the financial industry, but for him, it isn’t about the money. His success is rooted in his passion to focus on doing something better today than it was done yesterday. These days, he’s the CEO of Waldo General, Inc. that oversees the operation of King of Kash.