Having someone steal your credit card information and use it to run up unauthorized purchases can be an unnerving experience. But in reality, it's not a costly one. At least not for the victims.
A new report by MagnifyMoney shows most consumers who experience credit card fraud do not suffer a financial loss. The survey finds credit card companies are living up to promises of $0 liability in case of fraud.
Of course, it's a little easier for credit card issuers to do that now, since now the liability for fraud falls on the merchant. But even before that transition took place last October, Magnify Money found that 96% of credit card fraud victims never had to pay a dime.
While 22.1% of consumers have reported credit card fraud, 93% of those incidents involved a criminal compromising a card, not the cardholder's identity. There is a very clear distinction.
Difference between account and identity fraud
When someone gains access to your credit card information, he or she can use it to buy things, at least until the issuer finds out and blocks further transactions. But if a criminal opens a new credit card account in your name, because he or she has stolen your identity, that's a much more dangerous event, since it could be months before the fraud is discovered.
Nick Clements, the co-founder of MagnifyMoney, says consumers need to realize that some type of fraud will probably affect them at some point, and preventing it is probably going to be a difficult task. That said, he notes consumers can play a big role in reducing its effects.
“Our effort should be focused on early detection and rapid reporting of any credit card fraud,” Clements said.
That can be aided, he says, by using available tools to detect fraud early and avoid financial loss.
Doubts about chip card
The new chip and signature cards are supposed to bring credit card fraud to a halt, but Clements expresses some doubts. He says chip cards may help reduce some fraud at physical locations, but won't provide additional security in online and mobile transactions.
Additionally, many retailers – and even law enforcement – have said someone with a stolen credit card can easily forge a signature. Without requiring a PIN to complete the transaction, they say the new cards are less secure.
Many retail locations that have installed the new chip card readers still are not using them. Clements says there have been many complaints about transaction times. The survey showed that 20% of respondents complained that the chip cards are “painfully slow.”
What to do
The Federal Trade Commission (FTC) has some advice to project yourself against credit card fraud. It starts with keeping you card in a secure place at all times. It also suggests making a list – on paper, not electronically – of all your credit card numbers and contact information, so you can quickly report any suspicious activity.
Other tips include:
- Don't give your credit card information to anyone over the phone unless you initiated the call
- During a transaction, try not to let your card get out of your sight
- Check your bills for unauthorized activity as soon as they are available