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How to Prevent Credit and Debit Card Fraud

Closeup image of a credit card and currency

It’s one of the worst feelings anyone can experience.

You are out shopping, go to reach for your debit or credit card, and find that it’s missing. Or perhaps you are at home reviewing monthly bank statements and see hundreds of dollars in credit or debit card charges that you didn’t make.

In its annual report, the LexisNexis® True Cost of FraudSM study found that the total dollars loss connected to existing card fraud skyrocketed in 2013 to a whopping $11 billion – up from $8 billion in 2012. The report also quoted an executive at a mid-sized financial institution who says thieves are getting bolder from year to year.

“Fraudsters are now taking the next step as opposed to just getting the card data, going out and trying to use it. They are doing their due diligence based on card holder name or whatever data that they’re getting, and are able to use these personal identifiers to call into call centers, to make transfers into direct deposit accounts, to check credit lines and to place travel notifications. They are doing anything they can do to make it appear as though they are the legitimate customers and increase the take they get on their “cash out” if you will.”

So, has it become impossible to protect yourself from card fraud? Not at all. With the right information and resources, you can spot early warning signs of potential problems and address them before they get out of hand.

Knowledge is power – easy ways to keep your card info safe

Because a credit card thief can strike from a variety ways – physical or cyber – you can’t always stop fraud from happening. But, by following some simple tips from the Federal Trade Commission, you can make it more difficult for would-be thieves to access your credit cards and account information.

  • Keep a record of your account numbers, expiration dates and the phone number of your credit card companies in a secure place so you can report fraud to each company as soon as possible. Many companies have specific toll-free numbers and a 24-hour service to deal with credit card fraud complaints. Once you report the loss or theft, the law says you have no additional responsibility for charges you didn’t make; in any case, your liability for each card lost or stolen is $50. If you suspect that the card was used fraudulently, you may have to sign a statement under oath that you didn’t make the purchases in question.
  • Don’t lend your card to anyone — even your kids or roommates — and never leave your cards, receipts, or statements around your home or office. When you no longer need them, shred them before throwing them away.
  • Don’t give your account number to anyone over the phone unless you have made the call to a company you know to be reputable. If you have never done business with them before, do an online search first for reviews or complaints.
  • Carry your cards separately from your wallet. It can minimize your losses if someone steals your wallet or purse. And carry only the card you need for that outing.
  • During a transaction, keep your eye on your card. Make sure you get it back before you walk away.
  • Never sign a blank receipt. Draw a line through any blank spaces above the total.
  • Save your receipts to compare with your statement. Then shred them when they are no longer needed.
  • Open your bills promptly — or check them online often — and check them against recent purchases you have made.
  • Report any questionable charges to the card issuer as soon as possible.
  • Notify your card issuer if your address changes or if you will be traveling. If your card gets swiped at an unusual location, the card issuer may decline the suspicious transaction.
  • Never write your account number on the outside of an envelope.
Staying protected online

Large online, or e-Commerce, merchants are experiencing an increase in fraud-related costs again this year. The LexisNexis Fraud study shows that those merchants pay up to $2.33 for every $1 lost in fraudulent transactions. Lifelock, an identity theft protection company and UFCU partner, offers a few basic tips on making secure online purchases.

First, make sure the website you’re shopping on is secure and starts with an https:// instead of http://. You’ll also see a small lock on the lower right hand corner of the screen. This means the site is secure for transactions.

Don’t make online purchases in public places such as coffee shops or public Wi-Fi areas. Their networks are usually unsecure and the information you are entering might be stolen right there at that location. Finally, avoid using retail websites to store your personal and payment information. Although it speeds up the checkout process, it leaves your identity and financial information exposed should that server experience a data breach.

Other cards, like United Federal Credit Union’s eCa$h card, help limit your risk of a major online security breach. These cards work like a debit card and a gift card combined. It can be used just like your debit card, but since it is not directly tied to a checking account, only funds that are pre-loaded to the card can be accessed by the user. So, if someone steals this card’s account information, your main checking and savings accounts remain safe and unknown to the thief.

A watchful eye goes a long way

Just like a yearly visit to your doctor’s office, sometimes the best defense against card fraud is awareness and routine account checkups. By keeping a pulse on your account, you are able to respond quickly to any suspicious activity.

Review your monthly statements or e-Statements and notify your financial institution if you spot any charges that shouldn’t be there. Also, many card issuers provide fraud protection services. These departments track unusual account activity and call you to confirm whether you were the one who made the transaction. Another smart practice is to review your credit score frequently. Each of the three credit bureaus – Equifax, Experian and TransUnion – are required to provide you with one free credit report each year. Current reports are available from each bureau at a monthly or yearly cost.

Other options to consider are companies, like Lifelock, who provide comprehensive identity theft protection for your credit and finances. To encourage the safeguarding of your personal information, United Federal Credit Union offers Members a discount to Lifelock services.

New credit card technology is on the horizon

In 2015, many credit card companies and financial institutions, like United Federal Credit Union, will begin switching from the traditional magnetic credit and debit cards with cards embedded with a microchip. It’s known as EMV technology and was developed by Europay, MasterCard and Visa.

The new cards look and feel like a regular credit card, but are far more difficult for crooks to counterfeit.

Shoppers slide the cards into a slot, and the terminal reads the chip. A customer signs for the purchase or punches in a PIN. Each time a chip card is used, a one-time code is created that's needed to approve the transaction, which provides an additional layer of security. This feature is nearly impossible to replicate in counterfeit cards.

In addition to the security upgrade these cards deliver, the liability for counterfeit fraudulent activity is now shifting to businesses that can't process EMV chip cards beginning Oct. 1, 2015.

Retailers who don't upgrade to chip card terminals can still read the new cards, but they become liable if any counterfeit fraud takes place during the transaction. The technology isn't new. Chip cards are the standard in Europe. In places where these smart cards are used frequently, counterfeit fraud is significantly lower.

Credit card fraud has received more attention lately after several massive cyber-attacks of major retailers. Recent data breaches at Target, Home Depot and others have affected millions of Americans.

The U.S. is the last major market in the world to make the shift, partly because there hasn't been an incentive until now. The cards are more expensive for banks to issue and many merchants don't want to buy new terminals to read the cards.

While EMV technology does a good job of preventing fraud at “card-present transactions” — the shopping you do with your credit card in hand — it doesn't make shopping online any more secure.

Other solutions are being explored to combat fraud online. One idea is tokenization. Instead of submitting a full credit card number, an account is tied to a digital “token,” a cryptogram for that transaction that includes the last four digits of the card but not all the sensitive data.

The future may not involve any card. A system like Apple Pay, a mobile payment service available on some Apple devices including the iPhone, allows customers to use their phone at the checkout. iPhone users authenticate the purchase by holding their fingerprints to a sensor on the phone. This service will also be available to UFCU Members in 2015.

Remember to stay S.A.F.E.

Since the dawn of commerce and currency, there have been people trying to steal from others. But it’s not just the thieves who have evolved their tactics over time – financial intuitions and their members also have new ways to protect themselves against fraud. Even as technology advances and we advance toward an increasingly digital society, there are still some easy and effective ways to make sure your information stays safe.

Study your monthly account activity.
Alert your card issuer of any suspicious transactions as soon as possible.
Find trustworthy resources to stay educated on fraud trends and new protective technologies.
Examine your credit report at least once a year.

Resources:

www.lifelock.com
www.consumer.ftc.gov
www.bankrate.com

UFCU Routing Number: 272484894

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