2-In-5 American Cardholders Have Fallen Victim To Credit Card Scams

The convenience and ease of credit cards comes with a downside: credit card fraud is a tempting and lucrative target for criminals

According to a new Finder.com study, approximately 42 percent of consumers who use credit cards have experienced at least one fraudulent transaction in their lifetime. At an average loss of $1,319, credit card scammers have racked up approximately $136 billion in fraudulent charges.

How do you avoid becoming a victim of credit card scams? You can't eliminate all potential sources of credit card fraud, but you can greatly reduce the odds through pre-emptive action and good financial habits.

Check Your Accounts

Thieves love consumers who never check their accounts for fraudulent charges. According to the survey, over half of fraud victims fall into this category. They found out their card had been compromised when a retailer declined their cards.

"You can't rely on your credit card issuer to notice fraudulent behavior," notes Jennifer McDermott, Consumer Advocate for Finder.com. "Make checking your statements a regular habit and ensure you can vouch for every transaction made, even if small."

Thieves may use small transactions to see if you are paying attention. If you don't dispute smaller charges, scammers have a green light to rack up larger charges. That's why McDermott recommends that you "report any suspicious activity on your card to the issuer immediately."

Guard Your Information

Credit card scammers have many ways to access your credit card account and personal information. Limit those paths to maximize your protection. As McDermott advises, "it's important to be aware of the dangers and what you can do to protect yourself and your funds."

Scammers can find useful account details in your trash. McDermott suggests shredding any sensitive documents before throwing them away. Minimize paper documents by using electronic statements. For paper documents you must keep, lock them away in a secure location.

Beware of e-mail phishing scams that contain false links, and only use secure websites for online purchases. McDermott advises, "Never share your details over text, e-mail or phone, and keep your card close at all times."

If you do lose your card, call your issuer immediately to hold or cancel the account. Consider a card with an on/off switch that allows you to immediately deactivate the card and either reactivate it when the card is found or cancel the account entirely.

Every place you store your information online represents another opportunity for scammers to get your information. "Don't keep your details saved with online retailers," suggests McDermott. "It may be annoying to re-enter it every time you want to make a purchase, but it is a small price to pay for additional security."

Beware of skimmers that can be placed on card readers at gas stations, ATMs, or similar self-service locations. Skimmers are installed over the card reader to capture your information when you swipe your card. They're designed to look like standard readers and are difficult to detect, so stick to trusted readers whenever possible.

When You're A Victim

What happens when all your effort fails and scammers succeed? Immediate action is required. "Once an account has been compromised," says McDermott, "the card will need to be closed and a new one issued." Go through all recent charges with your credit card issuer and identify all fraudulent transactions. Consider filing a police report and a fraud affidavit with the Federal Trade Commission.

When you re-open your account, use different passwords and PIN numbers. Monitor your accounts more frequently. Consider a credit monitoring service if you're having trouble monitoring it yourself.

The Takeaway

Credit card scammers are resourceful and relentless. McDermott notes that "as fast as new security measures are being put in place, scammers are working out ways around them ... It's important to be aware of the dangers and what you can do to protect yourself and your funds." You need to be just as resourceful and relentless to fend them off.

Start with preventative measures. Protect your account and personal information as much as possible. As McDermott suggests, "keep both physical and digital evidence of your details safe." Make it difficult for a credit card scammer to get your information, and they are likely to move on to easier targets.

Check your accounts on a regular basis for any signs of fraud – and check your credit report regularly as well. Identity thieves may not bother with your existing accounts if they can set up new credit accounts in your name. If you do find any signs of fraud, take immediate action to limit the damage.

It may be a headache to take these preventative measures. That's nothing compared to the headache of closing accounts and disputing fraudulent charges – and, in the worst case, rebuilding ruined credit.

Credit cards can be an effective way to manage money, improve credit, earn points, and travel with perks if used the right way. Benzinga's personal finance staff provides tips on using credit cards effectively.

Related Links:

RFID-Blocking Wallets Are A Waste Of Money, But Not For The Reason You'd Think

Everything You Need To Know About Card Cracking Scams