How to pre­vent credit card fraud

Lodi News-Sentinel - - Business - By Dave Lee

Credit card fraud is on the rise around the world. Fraud-re­lated losses from all card types — credit, debit and pre­paid cards — reached $21.84 bil­lion in 2015.

Most losses oc­cur via coun­ter­feit cards used at ATMs or point-of-sale ter­mi­nals. For­tu­nately, fed­eral law states that credit card users are not li­able for more than $50 in fraud­u­lent charges to their credit cards if they re­port the charges to card is­suers within two days of learn­ing about them.

But that does not re­move the fi­nan­cial risk. Fraud can be costly when banks or card­hold­ers don’t de­tect it right away. Here’s how to pre­vent credit card fraud:

• Avoid sav­ing pay­ment data with on­line re­tail­ers: Of­ten, peo­ple save pay­ment in­for­ma­tion with on­line re­tail stores in ex­change for faster check­outs. Do­ing this puts them at risk of be­com­ing a fraud vic­tim.

Credit card in­for­ma­tion is stolen via data breaches and hack­ing. When buy­ers al­low their pay­ment in­for­ma­tion to be saved on a web server, they are at the mercy of the web­site’s se­cu­rity stan­dards.

Even large com­pa­nies have been vic­tims of se­cu­rity breaches. Poor en­cryp­tion, cod­ing and se­cu­rity train­ing are some of the el­e­ments that put a buyer’s credit card in­for­ma­tion at risk.

Once the thieves or hack­ers ob­tain credit card in­for­ma­tion, they can use the num­bers to pur­chase prod­ucts of on­line stores. In many cases, card num­bers are used for sev­eral months af­ter be­ing stolen.

When there is a se­cu­rity breach at a com­pany, it is bet­ter to re­quest a new card im­me­di­ately, even if there is no sus­pi­cious ac­tiv­ity on the card.

• Check credit card state­ments reg­u­larly: Credit card users some­times don’t read through their monthly state­ments, and they think credit card fraud is al­ways ob­vi­ous. In­stead, the pur­chases can be small, and this makes them hard to de­tect without the ap­pro­pri­ate level of at­ten­tion.

Some peo­ple also as­sume that banks al­ways catch fraud­u­lent ac­tiv­ity. While com­puter al­go­rithms that catch on­line fraud have im­proved over the years, they still have faults. For ex­am­ple, some small re­gional banks and other fi­nan­cial in­sti­tu­tions may not be as quick to no­tify their clients of sus­pi­cious ac­tiv­ity.

• Con­sider credit cards with EMV chips: Over the years, credit cards have be­come a lot more se­cure with the in­tro­duc­tion of EMV (Euro­pay, Master­card and Visa) cards. These cards have em­bed­ded mi­cro­pro­ces­sors that make credit cards harder to repli­cate com­pared to old mag­netic strip cards.

How­ever, not ev­ery credit card to­day has an EMV card chip. Re­quest a new credit card with a chip if your is­suer starts up­dat­ing its credit cards.

EMV chips don’t guar­an­tee ab­so­lute pro­tec­tion, so it is still im­por­tant to be vig­i­lant when us­ing credit cards.

• Be­ware of credit card skim­mers: A credit card skim­mer is a de­vice de­signed to steal in­for­ma­tion from a credit card with a mag­netic strip. These de­vices fit over credit card slots on ATMs and pay­ment ma­chines.

Once the card in­for­ma­tion is col­lected on the de­vice, thieves can down­load the skim­mer in­for­ma­tion to cre­ate a clone of the card, which they can use for fraud­u­lent ac­tiv­i­ties.

To pro­tect credit cards from skim­mers, it is im­por­tant to be­come fa­mil­iar with the look and feel of ATMs. Check the ATM and all ar­eas around it for an un­usual or loose ap­pear­ance. Re­port any­thing un­usual im­me­di­ately to po­lice.

• Re­port losses and fraud: The Fed­eral Re­serve Bank of Philadel­phia rec­om­mends that peo­ple who sus­pect fraud­u­lent ac­tiv­i­ties should con­tact the bank that is­sued the credit card as soon as pos­si­ble.

In the U.S., as soon as a credit card user re­ports sus­pected fraud, he or she typ­i­cally be­comes li­able for no more than $50 of the unau­tho­rized charges. No­ti­fy­ing the card is­suer to re­port fraud en­sures the com­pro­mised card is im­me­di­ately blocked and you are not li­able for fur­ther charges made.

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