Credit card fraud is a subset of identity theft, which occurs when criminals use your personal information to pose as you and steal your money. For example, identity thieves can use credentials such as confidential information and Social Security numbers to take over bank accounts, loans, and Social Security checks—taking advantage of your earnings.
Credit Card Fraud: What is it?
Credit card frauds are a type of identity theft in which criminals use their credit card account to acquire or obtain cash advances. For example, your physical credit card, account numbers, and PINs may be swiped, or new credit card accounts may be made in your name without your knowledge through one of your existing accounts. Once inside, the thieves rack up charges that get billed against you and your credit card company.
Credit card companies are aware of the issue and are constantly developing new methods to prevent unauthorized card use. At the same time, resourceful fraudsters (including international organized crime syndicates) continue to find workarounds for new technologies.
Because card companies are experienced in dealing with card fraud, being defrauded is unlikely to cost you money in the long run. Still, necessary investigations can take months, and unaddressed credit card fraud can significantly damage your credit reports and scores.
Dealing with different types of credit card scams can be time-consuming and labor intensive, and the theft of hundreds of millions of dollars each year raises the overall cost of using credit cards for all account holders.
Most Common Types of Credit Card Fraud
Credit card fraudsters are eager to incorporate new technologies into their schemes for obtaining credit card numbers and PINs, supplementing tried-and-true methods as old as credit cards.
Card Theft: Taking a credit card from a table or wallet is a standard method of gaining access to someone’s credit card. A variation on this scheme is to swipe newly issued cards from mailboxes. If your card is lost or if you are notified that you should have received a card that never arrived, informs the card issuer immediately.
Account Takeover: In this method, a criminal contacts your card issuer and uses your personal information to change access PINs, passwords, mailing addresses, and other information so that they gain control of your account and cut down your access to it. Depending on how regularly you use your card, this could take some time to notice and even longer to resolve with the card issuer. To prevent this type of theft, some credit card companies allow the creation of a verbal password that is not documented anywhere else.
Cloned Cards: Devices known as “skimmers” that fit over card readers at gas pumps and retail sales terminals can allow thieves to steal your card number when you swipe your card, then duplicate it for their use. EMV chip-enabled cards have made this process significantly more difficult.
Card-Not-Present Theft: It refers to the fraudulent use of a credit card account that does not necessitate possessing a physical card. It is frequently used to make online purchases and only needs your name, account number, and the card’s security code to be stolen. In recent years, data breaches at retailers and other companies that maintain large card-number databases, as well as illicit website traffic in lists of card users, have exposed the personal information of millions of users.
Detecting and Combating Credit Card Fraud

Credit Card Frauds can be detected early by routinely checking your credit accounts for signs of suspicious activity:
Examine your credit card statements every month, whether you receive them online or in hard copy, keeping an eye out for any unexpected purchases or cash advances. Approach the card issuer immediately to dispute the charges if you notice any unusual purchases.
Defending Yourself Against Credit Card Fraud
Because of the increasing majority of credit card fraud, there is no foolproof way to avoid becoming a victim, but common-sense precautions can help you prevent it:
- Protect your wallet or purse, and never leave your credit cards unattended when you’re out and about.
- Keep credit cards at home rather than carrying them with you, never take your Social Security card unless necessary (for example, when obtaining a passport), and always return it to safekeeping when you’re done.
- When purchasing online, ensure the website is secure (look for “https://” at the beginning of the site address), and avoid storing your credit card number on the website.
- If scammers are asking you to provide a credit card number, Social Security number, or other personal details over the phone, make sure you speak with someone you trust. If the request comes from a phone call, consider whether the organization they claim to represent should already have the information they require. If in doubt, call them back and use a verifiable phone number.
- Visit the Credit card recovery companies for more information and tips on avoiding credit card fraud. They will assist you by providing a free copy of your credit report, investigating disputed credit report information, and removing the information from your credit report once the fraud is proven.
Conclusion
Fraud is a negative side effect of using credit cards for convenience. However, knowledge and vigilance can help you stop credit card fraud, and acting quickly and decisively can help limit the risks if you become a victim.

Jason is the Marketing Manager at a local advertising company in Australia. He moved to Australia 10 years back for his passion for advertising. Jason recently joined BFA as a volunteer writer and contributes by sharing his valuable experience and knowledge.
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