July 9, 2009
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News: Protect Yourself Against CC Fraud
Criminals have a variety of ways to obtain personal and credit card information, but two basic ways to use it. The first and most common method is by taking over an existing account by either physically stealing the credit card or acquiring the card number, pin number, and verification code off the back of the card. Some ways criminals access this information if by hacking, skimming, or stealing the information when you give a clerk your credit card to pay for products or services. Consumers usually see this type of fraud when reviewing monthly statements and see suspicious or unauthorized charges. Sometimes, the bank notices an unusual spending pattern and notifies the cardholder for verification. Typically, victims of account takeover pay little or nothing if they report the fraudulent charges within 60 days because most cards have a zero liability policy.
When a thief gains access to personal information such as name, address and social security number, they have the capabilities of participating in new account fraud. In new account fraud, the criminal uses the stolen personal information to open up a new credit card account. This type of fraud is classic identity theft. The thief uses the new card to purchase high ticket items for resale and access large cash advances. They max the card out to its limit, don't pay the bill, and then destroy the card. The victim of new account fraud remains unaware of the credit card account until he either checks out his credit report or is tracked down by the bank for collections. New account fraud is much more difficult to defend against, destroys the individual's credit history, and can be a costly mess to clean up.
So how do you protect yourself. Account takeover is easier to defend against than new account. The easiest way is to pay attention. Check your credit card statements regularly; weekly online is best, but never go longer than a month. Report any discrepancies immediately to your lender. It isn't as easy to protect yourself against identity theft, but there are ways. Check your credit report regularly to assure no suspicious accounts show up. Take advantage of the credit freeze option offered by the credit reporting bureaus, and use fraud alerts offered by your lender. Nothing is 100% guaranteed, but taking these steps should help you to sleep better at night.