It's a sinking feeling. You've just enjoyed an excellent dinner and given your credit card to the waiter. Ten minutes later, the waiter is back at your table suggesting that maybe you want to use another card.
Welcome to the growing club of credit card theft victims. You are not alone. The numbers can be staggering. Study the infographic below and grasp the following key figures:
- Credit card fraud resulted in losses of 1.27 billion during 2012.
- Card issuers incurred 63% of those losses and merchants suffered 37%
- In 2012, America made up 47.3% of the global payment card fraud loss
- 67 percent more Americans were hit by financial data theft in 2012 than in 2010
Special thanks for Nick Wooldridge - a credit card fraud lawyer of LV Criminal Defense - who exclusively contributed this infographic to the article.
There are some things you can do to minimize the loss.
One call to law enforcement in your area can start the official investigation and provide you with the all important police report.
When reporting stolen card(s), be prepared to provide the detective with all the needed information such as card name, user's name, card number, date of issue, etc.
The police will file a copy in their office and provide you with a copy for your records.
It wouldn't be a bad plan to obtain several copies of the report and get each notarized. Make sure to keep them handy since your credit card issuer will likely be asking for a copy of the report.
Having hardcopy printouts of your credit cards is great. But the images are usually locked in a desk at home and not handy when you need them. A supplement to paper copies is a photograph. Using your cellphone or tablet, photograph your credit and debit cards - front and back. For convenience, upload them to encrypted cloud storage so they are accessible from anywhere you can get WiFi. If you don't trust cloud security, you can always use a jump drive, but that kind of defeats the purpose of photographing them.
Check Other Cards
Credit cards are like bananas. They come in bunches. If a thief manages to get his hand on your financial and personal information for one card, you want to check the other cards you hold as a precaution against the thief being able to access the other cards based on the same information as the card that was stolen.
Often, people recycle information such as PINs and passwords on several cards. But what is convenient, isn't safe.
Don't be afraid to discuss any fraudulent transactions you find. Life can get busy, and important details may be overlooked.
To dispute previously unnoticed transactions, follow the same procedure when you argue current fraudulent transactions.
When you think you've found something false, try to see if the entry is authorized but you don't recognize it. Often, companies work under names that are different than what shows on your receipt. Often, you can find the merchant's phone number. Contact the retailer and get information about the entry.
The Internet can be helpful as well. Often people have found a strange charge on their statement and merely Google the dealer and the words "fraudulent charges." Almost always, the entry is crooked, or you've registered, unknowingly, for some tricky charge from a site you visited.
If you feel you were tricked into the charge, call the merchant and lodge a complaint about the deception. The least they can do is reverse the entry. If they don't, contact your state's attorney general and the Federal Trade Commission. Regardless of the route you go, call the bank distributing the card and have the card canceled so that you pocketbook can't be nailed anymore.
Order a Credit Report
The Fair Credit Reporting Act (FCRA) mandates that the three nationwide credit reporting services -- Equifax, Experian, and TransUnion -- give consumers a no-cost copy of their credit record, upon request, once every 12 months.
In addition to the annual free reports, a customer can always request another copy for a small charge.
To purchase a copy of a credit report, contact:
- Equifax:1-800-685-1111; equifax.com
- Experian: 1-888-397-3742; experian.com
- TransUnion: 1-800-916-8800; transunion.com
Since you requested an extra issue of your credit report, you may want to order a report from each of the three recording organizations. Nationwide credit reporting agencies get their information from a variety -- and usually different -- sources. The information contained in a report from one company may not show all, or the same, data in the reports from the other organizations. This doesn't mean that the information in any of the reports is incorrect -- it's just different.
Lock Credit Report
Despite the low odds of having your identity stolen, it's a pain to unravel the tangled mess. Sometimes enterprising hackers just need to get their hands on your Social Security number, address and date of birth to start a shopping spree on your dime -- or worse, open new accounts in your name.
Most victims don't know anything is wrong until they apply for a new account and find their credit has been tossed into the garbage. One solution many people use is blocking access to information in their credit reports by instituting a "security freeze."
A security freeze is your instruction to the three major credit bureaus ordering them to refuse to allow new creditors from viewing your credit report and score. Since most businesses won't lend without first checking your report, a freeze can keep identity thieves from forming new accounts in your name.
Before putting yourself through the expense and trouble of doing a credit freeze, be sure to understand how the process works and make yourself knowledgeable about any inconveniences you may experience:
To freeze your credit reports, contact each of the three credit bureaus individually. You'll need to be prepared to provide your name, address, date of birth, Social Security number and possibly other personal information. Fees and filing requirements will vary according to state law and usually run from $5 to $10. If you have been a victim of identity theft, credit freezes are lifted once you provide a copy of the police report.
Contact USPS to see if mail forwarding has been activated for your address. Cyber thieves often use the mail forwarding service provided by the United States Postal Service to gather additional information and credit cards.
Mail forwarding is not a complicated process. Anyone can claim to be you and log in to USPS.com and for a dollar, charged to a credit card, can redirect your mail for up to a year.
There are two methods a thief can use when it comes to mail forwarding:
Temporary service can be as short as 15 days or as long as one year. Mail is sent piece by piece to the new address
For a weekly fee, the post office will hold your mail, package and ship it weekly by Priority Mail.
Email forwarding is also used by cyber thieves to gather personal financial data such as passwords, PINs and bank account information.
By the time a cyber thief has enough information to use your credit card, they have enough information to hack your email. Emails coming to you with updated personal information can be copied and forwarded to the thief's email address, and you'll never know that someone is practically reading your email over your shoulder.
Many users are now considering 3D Secure, an additional fraud prevention method that is available to companies in processing credit card transactions.
3D allows shoppers to assign a password to their card that is verified whenever a transaction is processed through a website that supports it.
To date, 3D Secure is the only fraud prevention program that is available that offers companies liability coverage for transactions.
There are three primary advantages of using 3D Secure
Liability Shift - Liability for verified transactions is turned from the vendor to the card issuer. This offers protection by the card issuer against chargebacks as well.
No Extra Cost -- There are no extra costs to add 3D Secure to an account. The acquiring bank -- the merchant's bank -- may add a small charge. However, the card holder often finds that transaction costs are often lower as a result of using 3D Secure
Ease of Setup -- The set-up is controlled by you and is easy to get up-and-running.
Single Use Credit Card
Whenever anything is bought, with a credit card, online, the customer also has to provide name, phone number and address. This information is seen by the processing banks as well as the merchant. But what if someone doesn't want the bank or merchant to know where they live? What about the possibility of a cyber thief hacking into the merchant's files? Remember the Target fiasco?
Abine, a Boston-based company, has introduced single-use credit cards, also called masked credit cards, which allow the consumer to use any address, any name, and a one-time card number. When a user signs up, the program completes the merchant's online form and does it faster than the user can fill out the form themselves.
Future versions of the single use credit card will give users the ability to use masked cards at more than one merchant. For example, the user won't be limited to using the card at Amazon, but can use it any merchant where the user isn't comfortable with the vendor's security practices.
Currently, banks including Bank of America, Citibank, and Discover offer customers the ability to create unique credit card numbers for each merchant.
Checking your bank card statement often can seem like a needless hassle. Your statements need to be verified whenever you use your card -- if you use your credit card daily, then regular statement reviews should become even more of a habit.
Apps for smartphones can make the review process easier, and if fraudulent activity shows up, payment will be able to be stopped even before it goes through.
Bank Liability Policy
Make sure to double check the bank's liability policy when you get a new credit card. It is also a good plan to examine the liability statements annually. Sometimes, depending on the type of card you use, and how you use it, the bank's zero-liability policy may not protect you.
A zero-liability policy helps protect cardholders from losing any money if they become victimized by fraud. The policies though are not created equal when it comes to fraud reporting deadlines, coverage, and even replacement time.
There are some "gotchas" in how the transaction are handled. One difference is in liability coverage for fraud associated with an ATM account. There is a great deal of fine print, so read carefully to see what each bank will or will not protect.
If you discover fraud, the first step would be to contact the bank, but don't assume it will take the matter out of your hands. Sometimes banks will tell customers to contact the merchants where the transactions were made and ask them to clear the transactions from the account.
Check the Spouse's Cards
If your cards are stolen, be sure to double check the status of your spouse's cards. Once thieves know your personal data, it's a small step for them to find out hers. This is especially urgent if your spouse is on a joint account with you on any of your cards.
Follow the same steps for your spouse as you do for yourself:
- Notify the card issuers
- Double check statements
- Consider canceling and getting new cards re-issued if you have any doubt about your spouse's cards being compromised
If you've been accessing the Internet for any length of time, you may be astounded to find the nooks and crannies where your personal data is already available.
- County Courthouse records
While each of these sites probably will not contain all of your information, put together it's surprising how much of your personal information is already publically available.
Look for your compromised personal information by doing a Google Search on your name, or any names you've used. Enter your name as you usually, and legally, use it with either your first and last names or your entire name.
To monitor the web for any presence of your name, set up a Google Alert. You will be notified daily if your name shows up online.
Signature Based Cards
Europe is a little more advanced than America regarding credit card security as it has all but abandoned signature-based cards. The alternative cards, used widely, have embedded chip technology, EMW, which provides a greater level of security as the chips make it harder for criminals to fabricate counterfeit cards or even traffic in stolen cards.
EMW's embedded chips stop counterfeiters as the chips transmit different unique numbers each time the card is used instead of the static customers' name and signature. The chip cards also aren't exposed to data breaches since the user's name isn't transmitted and aren't in the data pool that hackers look for. Armed with names and card numbers, cyber thieves can create counterfeit credit cards for use globally.
Some banks in America have issued the high-tech cards to wealthy customers who travel internationally for business, but the cards aren't commonly found. Most Americans use cards whose only verification is a signature -- and merchants rarely check signatures.
The American trade group, National Retail Federation, has pushed for greater adoption of EMW technology. The technology has been slow to catch on in America because merchants have hesitated at the cost of switching to new cards requiring new point-of-sale terminals and expensive software.
Duplicate Card Readers
Duplicate card readers are used in a scam known as "card-skimming." Card-skimming is the collection of card numbers, PINs, and other useful information for stealing money from bank accounts. With the stripped data, cyber thieves can produce counterfeit ATM cards and then use those cards to remove money from accounts and make online purchases. The financial data may also be bundled and sold to others who will do the work of emptying bank accounts themselves.
The scheme relies on a piece of high technology. A phony card slot is installed over the real one and scans the information from the card's magnetic stripe. A small camera, hidden inside an adjacent pamphlet holder, records information from the ATM display screen and keypad. The stolen information is then sent through a wireless transmitter to waiting cyber thieves who can capture it from up to 200 yards away.
In addition to banks and other locations with ATMs, many point-of-sale locations, such as gas station pumps) were customers use debit cards to pay for purchases and are possible targets of card-skimmers.
While the growing popularity of "smart cards" have helped drive down the problem of skimming, determining if an ATM is rigged can be difficult even for the most careful users.
The best defense is for ATM customers to remain careful and vigilant when using their cards and get into the habit of using the same ATM for as many transactions as possible.
Close and Start Over
If all of this seems to be too overwhelming, consider a drastic, but not an increasingly popular option.
Cancel all of your credit cards, cut them up into pieces so they can't be used if found and move to a cash-only lifestyle.
Hundreds of thousands of people move to a cash-only lifestyle each year. Users report:
- Less stress worrying about stolen financial data, and
- They see savings as they're not as prone to large impulse purchases
- Additional savings on credit card charges - if there's no credit card, there can't be credit card charges
Many banks also offer pre-paid debit and credit cards. A pre-paid card, for many, combines the best of both worlds. The cards can be used as cash for convenience plus are usable online and anywhere that credit cards are accepted. Most pre-paid debit and credit cards have a standard monthly fee of $4.95 with a minimum deposit.
The only catch is they can't be used in excess of the cash amount pre-installed on the card.
Before deciding which type of card to use, traditional or pre-paid, do a little research online and figure out which would be best for your situation.
George Jenkins, an author of a well-known Identity Theft blog and a frequent traveler, told me this useful tip. While not actually a solution if your cards have been stolen, notifying your bank card issuers of impending travel plans will potentially save you a headache when you try to use that American issued card in Buenos Aires - or elsewhere overseas.
Each of the major credit card issuers monitor for overseas usage. If they spot your card being used in Paris and your home is in New York, your purchase is apt to be denied as a security measure against fraudulent use.
Before traveling, contact the card issuer and let them know your intended travel dates and destinations. Contacting them a week or two in advance of your trip is normally enough time for them to flag your file and clear your credit card for use.