Tips for Avoiding Credit Card Fraud
With nearly 38,000 complaints logged in 2015, credit card fraud ranks as the second most common form of identity theft, trailing only tax- or wage-related fraud, according to the Federal Trade Commission.
It can take many forms, including:
- Scammers who try to sucker you into giving up credit card info over the phone.
- E-mail phishing.
- Skimmers – devices hidden in the mouths of card slots at gas pumps, ATMs and even restaurants to steal card info.
Nothing but healthy skepticism can save you from falling for a slick hustler. But advances in technology are designed to better protect consumers against credit card fraud when making purchases in person.
Though they've been used widely for years overseas, EMV cards are relatively new in the U.S. They still have the thick black band on the back, so they can continue to act like the “magstripe” cards that people have been carrying in their wallets and purses for decades. The brainy component is the chip on the front.
When inserted into an EMV reader, the chip generates a unique, encrypted transaction code, or token. When it reaches your bank, it is decrypted to verify your account and authorize the payment.
By comparison, magstripes use easily cloned static information. In the U.K., where EMVs have been in use more than a decade, the switch cut fraud by more than two-thirds.
Bear in mind that EMVs are no safer than magstripes when you're buying online or giving credit card info to someone over the phone. And for now, most gas pump slots aren't equipped with EMV readers.
Mobile payment services
So-called “mobile wallets” or “e-wallets” use the same kind of token technology as EMV cards. The difference is that instead of pulling out your card, you tap or scan your smartphone at retail checkout counters.
Depending on the smartphone pay system, you may need to enter a PIN or scan your fingerprint to complete a transaction. With Apple, Android and Samsung Pay, you're assigned a substitute card number that's unique to the phone and tethered to your credit card number.
Using your smartphone or tablet adds another layer of security, because a hacker would need to have both the device and its password.
This developing technology consolidates many credit cards into one, doing away with the need to carry a wallet full of plastic, and reducing your risk of dropping or leaving behind a card that someone else could find and misuse.
Smart cards are about the same size as a standard credit or debit card. You upload your various cards' information (usually with the help of a matching app on your phone), and can then toggle between them from the face of the smart card. When it's time to pay, you pick the one you want and swipe, insert into an EMV slot, or hold the smart card up to a card reader, depending on your provider.
Companies in this space include Coin, Plastc and Swyp. Some use a third-party service to verify your identity by asking questions only you would be able to answer, such as previous addresses, family members and other information.
Monitor your credit card statements
It's a good idea to check your accounts regularly. If you see charges you know you didn't make or otherwise don't recognize, contact the card issuer to clarify and, if necessary, dispute them. You may also want to set up a fraud alert or request a credit freeze.
If you're buying online, make sure you're on a secure site before you enter sensitive information. Look for the https:// or a padlock at the start of the web address.
It's also wise to avoid accessing bank or personal finance sites using public Wi-Fi, which can be a haven for hackers.
© Copyright 2016 NerdWallet, Inc. All Rights Reserved