Credit cards: Americans love them. The average person has several. Scam artists love them too. With the convenience of having a credit card comes some risks - credit card fraud. The following scam has been around for some time and continues to defraud people.

The Scam

You receive a call from a person claiming to be employed either at Visa or MasterCard. The caller claims to be calling from the Security and Fraud Department and tells you that your card has been flagged for an unusual purchase pattern. The caller then cites a particular purchase (typically under $500) and asks if you really purchased the questionable item. When you respond, "No", the caller then promises to credit your account with the amount and begin a fraud investigation. The caller typically asks certain identity question, such as address and more importantly, your credit card security number (the 3 or 4 digits in the back of the card).

The caller succeeds in obtaining the security information on your account and then uses that information to make a purchase. Unless you know this is a scam, when you get your credit card statement and see the fraudulent charge, you assume that the investigation is under way and is being taken care of. Meanwhile, this is all a scam. The purpose of the scam is to get that 3-4 digit security number.

How Can You Protect Yourself?

With this particular scam, don't give out any information over the phone unless you call the number provided in the back of your card. If you do receive a phone call reporting a fraudulent charge, hang up and call the number provided on your card.

If you have already fallen victim to this or a similar scam, contact your credit card company. Visa and MasterCard have also been encouraging defrauded consumers to file a police report.

Credit Card Fraud Prevention Tips

Credit card fraud is a serious crime as well as an inconvenience. Follow these tips1 to avoid scams and fraudulent charges.

  1. Keep an eye on your credit card every time you use it, and make sure you get it back as quickly as possible
  2. Be very careful to whom you give your credit card
  3. Don't give out your account number over the phone unless you initiate the call and you know the company is reputable. Never give your credit card information out when you receive a phone call. For example, if you're told there has been a "computer problem" and the caller needs you to verify information. Legitimate companies don't call you to ask for a credit card number over the phone
  4. Never respond to e-mail messages that request you provide your credit card info via e-mail, and don't ever respond to e-mail messages that ask you to go to a Web site to verify personal (and credit card) information. These are called "phishing" scams
  5. Never provide your credit card information on a Web site that is not a secure site
  6. Shred all credit card applications you receive in the mail
  7. Don't write your PIN number on your credit card - or have it anywhere near your credit card (in the event that your wallet gets stolen)
  8. Never leave your credit cards or receipts lying around
  9. Shield your credit card number so that others around you can't copy it or capture it on a cell phone or other camera
  10. Keep a list in a secure place with all of your account numbers and expiration dates, as well as the phone number and address of each bank that has issued you a credit card. Keep this list updated each time you get a new credit card
  11. Only carry around credit cards that you absolutely need. Don't carry around extra credit cards that you rarely use
  12. Open credit card bills promptly and make sure there are no bogus charges. Treat your credit card bill like your checking account - reconcile it monthly. Save your receipts so you can compare them with your monthly bills
  13. If you find any charges that you don't have a receipt for - or that you don't recognize - report these charges promptly (and in writing) to the credit card issuer
  14. Always void and destroy incorrect receipts
  15. Shred anything with your credit card number written on it
  16. Never sign a blank credit card receipt. Carefully draw a line through blank portions of the receipt where additional charges could be fraudulently added
  17. If there is a carbon that is used in a credit card transaction, destroy it immediately
  18. If you move, notify your credit card issuers in advance of your change of address

If You Suspect Credit Card Fraud

In the event you do suspect fraudulent activity, or if your cards are lost or stolen, contact the issuing company as soon as possible. The good news is that credit cards are insured and protect you against such schemes, so long as you are vigilant in spotting and reporting such abuse.

According to the law, once you have reported the loss or theft of your credit card, you have no more responsibility for unauthorized charges. Further, your maximum liability under federal law is $50 per lost or stolen credit card - and many credit card issuers will even waive that fee for good customers. For fraudulent charges when the card is still in your possession, there is no liability fee.

Be sure that your card number is changed and monitor your statements to be sure that there are no additional charges. Use common sense and remember, it is always better to be extra careful and suspecting when it comes to your finances.

Sources
1 Scambusters.org, http://www.scambusters.org/CreditCardFraud, accessed August 20, 2009.

Questions for Your Attorney

  • If I fell for a phone-at-home credit card scam, and I did give out the security code from my credit card, can the card issuer hold me liable for fraudulent charges? Could the issuer claim that I cooperated with the scammer?
  • If I'm going to file a police report for credit card fraud, should I just seek help from my local police department?
  • I think my homeowner's insurance policy should cover my losses due to a credit card scam, but the company denied my claim; what should I do?

Tagged as: Consumer Law, Consumer Fraud, credit card fraud, consumer fraud lawyer