Credit fraud costs businesses billions of dollars every year in lost revenue, but the effect on consumers is much more personal.
Because anyone with a credit card is susceptible to fraud, the number of consumers negatively impacted continues to rise every year. By the end of this year, credit fraud is estimated to represent $31.67 billion in losses.
If your credit card has recently been compromised, or to understand what to do if it happens in the future, follow this step-by-step guide to credit fraud recovery.
What Is Credit Fraud?
Credit fraud is the umbrella term that encompasses several types of fraud. Anytime your credit card has been accessed by an unauthorized user to purchase goods or services, it is fraud.
There are three general types of credit fraud:
- Identity Theft: When someone uses your personal information without permission to purchase goods and services or to commit other types of fraud. Credit card fraud is the No. 1 form of identity theft fraud.
- Fraud Spree: Unauthorized spending that usually occurs on multiple accounts.
- Identity Assumption: The use of your stolen identity over a long-term period.
Reporting Credit Card Fraud
If you suspect credit card identity theft, follow these steps:
- Call the Credit Card Company: Reporting credit card fraud immediately is important for damage control.
- Change Passwords and PINs: Log on to your credit card accounts and make note of the bogus activity. Change all passwords, PINs and variable information immediately.
- Initiate a Fraud Alert: Contact the three credit bureaus — Experian, Equifax and TransUnion to tell them your credit card has been compromised and request a Fraud Alert be put on your credit reports.
- Initiate a Credit Freeze: You can also initiate a Credit Freeze with each bureau. A Credit Freeze (also called a Security Freeze) allows you to restrict access to your TransUnion, Equifax and Experian credit reports and scores.
- File a Police Report: Credit card fraud isn’t always a one-and-done crime. Thieves may be successful using the card many times. File a police report so an investigation can take place if it’s necessary.
- Get Copies of Your Credit Reports: With the information in hand, you can see exactly what activity has been reported. If someone opened a new account in your name, it’ll show up on the report because the creditor will have to make a hard inquiry. You can also sign up for credit monitoring, which can alert you anytime a lender or creditor reports an activity on your account.
- Remove Card from Online Accounts: If you’ve saved your credit card information on any website, remove it to prevent further unauthorized spending.
Does a Fraud Alert Hurt Your Credit?
If you’re a victim of credit card identity theft and you have a fraud alert on your credit reports, your credit scores won’t be impacted in any way.
And you do not have to worry about paying off debt that incurred from the credit card breach. All the major credit card companies have what’s known as a zero liability policy, so you won’t be held responsible for credit card charges you didn’t authorize, as long as you report it quickly.
Protect yourself from credit card fraud by keeping your credit cards and passwords guarded. By being aware of the proliferation of theft, you’ll be in a better position to keep the criminals away.