Credit card fraud: improving your security

Have you ever noticed a purchase on your credit card statement that you didn’t make? Maybe you’ve seen other unusual activity on your credit card account. You may be the victim of credit card fraud.

Thankfully, there are many security measures both you and your card provider can put in place to reduce or prevent this risk, as you’ll discover below.

What is credit card fraud?

Credit card fraud is when your credit card’s number, expiry date or personal information are obtained or used intentionally by another person to make purchases or payments without your consent. Fraud can occur if your physical card is stolen or if details are obtained through skimming, scamming or hacking.

Such fraud can happen in a variety of ways, so it’s essential to be aware of this whenever making payments online or in person. While many providers have security measures in place to prevent fraudulent transactions, it’s still possible for illegal activity to occur.

What types of credit card fraud are there?

The following types of fraud occur in Australia, according to the Australian Criminal Intelligence Commission:1

Counterfeit card fraudCriminals can create fake credit cards based on your personal information and card details they obtain. Even with your physical card in your possession, someone else could still be making payments and running up your credit card bill without you knowing.
Card-not-present transactionsEven without a counterfeit card or your physical card, hackers may obtain your card details and personal information through other means to make unauthorised credit card transactions. These would usually be online transactions.
Application fraudThere are cases where people may apply for a credit card in your name with your personal information, but without your knowledge or consent.
Credit card skimmingSkimming occurs when thieves or hackers install a small electronic device to legitimate ATMs or EFTPOS machines to steal your PIN, card number, personal details and other credit card information.
These devices can be hard to see, and you won’t always know your card has been hacked until it’s too late. Report credit card fraud as soon as you notice something isn’t right.
TheftIf your card is stolen, fraudulent transactions can occur until you cancel or freeze your credit card account. If you’ve lost your wallet, contact your provider asap about the best possible steps. Fraudsters may also steal credit cards or personal information that’s been sent in the mail, so contact your provider if you’ve ordered a card that hasn’t arrived.
HackingCompanies, businesses and individuals alike can be the victim of hacking, where personal, credit card and financial details can be illegally obtained and used by criminals.
Even if your own device hasn’t been hacked, pay close attention to your card’s transactions in case a business you use has been hacked and your card details compromised.
PhishingCriminals may send convincing emails, messages, surveys and other forms of communication to trick you into handing over your credit card information and details. These messages often appear to come from legitimate organisations (such as banks, shops, phone companies) and use websites that look real but are actually from criminals.
They can then use this information for card-not-present transactions, fake applications and creating counterfeit cards.

How to prevent credit card fraud

Even when your provider offers fraud protection and added security, there are several practices you can put into place to prevent credit card fraud and keep your details as safe as possible when making transactions.

  • Change your PIN regularly. It pays to refresh it at least once yearly. Use number combinations that are harder for the fraudsters to guess or obtain. Always change your PIN if a company you interact with has been hacked or your fear your card details have been compromised. Also, note that some credit cards in the market now have an automatic pin change feature.
  • Activate two-factor authentication. Two-factor authentication adds further security to your credit card and account. It’s usually a combination of multiple forms of protection, such as passwords, SMS or email notifications or face or voice activation.
  • Use a password manager on your devices. Many password manager software applications also act as random password generators for each website you log into. And the best thing is you only need one master password to access your stored passwords.
  • Don’t respond to suspicious messages or click on pop-up windows. Most organisations will never ask you to confirm your details via email or text. Look for spelling mistakes or other errors that could suggest a message is fraudulent. If in doubt, head directly to a company’s website and log in this way.
  • Confirm the secure connection of a website. Look out for the closed padlock symbol at the start of a URL in your web browser. This can help you validate the security of a website, especially because a fake website can look very similar to a legitimate one. A padlock with a warning symbol (such as a yellow triangle) could indicate that the website you’re visiting isn’t safe. However, you should always still check and verify the accuracy of the URL address.
  • Check the sender’s email address. Always confirm that an email is being sent from an actual organisation. Look out for spelling mistakes and other errors in an email address and compare it to other messages you’ve received from that business in the past.
  • Be wary of giving credit card information over the phone. Just as scammers send phishing messages online, they can also try and obtain your details by ringing you directly. If unsure, rather than calling the person back on the phone number provided, call them back by looking up and ringing the company’s official phone number before handing over any personal information, or visit them in person.
  • Secure your mailbox. That’s right – your ‘analogue’ mailbox. Keep it under lock and key so statements, credit cards and other mail can’t be stolen. You may also wish to open a PO box at a more secure location if you’re concerned.
  • Destroy paper statements and bills after they’ve been paid. Shredding usually does the trick, making it next to impossible for anyone to obtain and copy your personal details. Don’t put bills or statements directly in the bin without destroying them.
  • Securely store credit card statements. This one goes without saying. If you don’t have much use for printed statements, you can always switch off paper bills altogether and opt to receive them online through internet banking.
  • Protect passwords. If you’re using a telephone banking service, make sure no one hears you. When logging into your bank account, always ensure your login details are not visible. Similarly, never share passwords or account details with other people.
  • Install and regularly update your anti-virus software. All types of computers and digital devices, regardless of operating system, should be security conscious. A high level of anti-virus protection could keep your credit card transactions safe.
  • Take care when shopping online. Always use trusted online shopping services and avoid clicking on offers that sound too good to be true. Also aim to use websites that offer secure methods of payment such as PayPal.
  • Cover your PIN. It’s a good idea to cover your PIN whenever using an ATM or EFTPOS machine. This could reduce the likelihood of a skimming device detecting this number.

Couple talking about ways to avoid credit card fraud

What security features do credit card providers offer?

The security features your credit card offers will usually depend on the type of card you have and who provides you with the card. In Australia, some credit card providers offer zero-liability policies – where they’ll cover fraudulent activity in many cases.

Common security features include:

  • Chip technology. Most cards now include built-in chip technology, which contains the card’s data, encrypts it and makes it more difficult to be stolen from skimming devices. Many providers now require you to enter a PIN rather than signing, which adds another layer of security.
  • Fraud surveillance. Many banks and card issuers actively try to nip fraud in the bud through 24/7 fraud monitoring. If they notice something suspicious on your card, chances are they’ll freeze it or get you to confirm a payment before it’s processed.
  • Security codes and questions. You may be able to add an extra layer of protection to online purchases by answering security questions or requesting verification codes to be sent to you as a text message.
  • Payment encryption. There are various ways providers can encrypt your details, so credit card and personal information isn’t stored online when making purchasing via the internet.
  • Ability to add to a digital wallet. You can add many credit cards to digital wallets such as PayPal, Apple Wallet and Google Wallet. You’re often required to use your fingerprint or face ID to confirm or authorise payments.

Couple making secure credit card payment online

What should I do if my credit card is stolen?

The key is not to panic, but to report your card as stolen as soon as possible with your card issuer. This ensures the thief can’t make further unauthorised credit card transactions. Most providers have a 24/7 hotline you can ring, while others allow you to report a card as stolen online.

Even if you’re unsure if you’ve simply misplaced your card, ring your provider asap as they may be able to place a temporary freeze on the card. From there, your credit card provider will be able to run through any recent transactions to determine if there’s been any fraudulent activity on the card.

Many credit card providers offer a fraud protection guarantee in circumstances where fraud has been detected. Under certain circumstances (usually where you’re in no way at fault), they’ll cover the cost of fraudulent activity on your card.

What to do if your credit card is used fraudulently

Follow these steps if you notice any fraudulent activity on your credit card.

  1. Make a note of any suspicious transactions on your credit card statement. If neither you or the additional cardholders are aware of the transaction, get in contact with your card provider.
  2. Report credit card fraud as soon as you notice it. Banks may advise blocking the card and issue you a new one to stop any further fraudulent transactions. A provider will likely launch an investigation into how these transactions occurred.
  3. Your credit card provider will usually handle the fraud investigation, but they may have additional questions. It’s best to cooperate and answer truthfully. Depending on the complexity of the case, it may take some time for any money to be refunded.
  4. If you’re not found to be at fault, your card provider will usually issue a refund.
  5. Check your credit history to ensure the fraudulent activity hasn’t left a bad mark on your credit report. Contacting your credit card provider about any errors can help you maintain your credit score.
  6. Update your passwords and PIN regularly to reduce the risk of fraudulent activity online and cover your PIN when using your card in person. Also, keep up-to-date with the latest scams through reputable sources such as the Australian Competition and Consumer Commission’s (ACCC) Scamwatch website and be careful when giving details to businesses over the phone or via email.

In cases where your card provider can’t launch an investigation or refund any stolen funds, you may need to contact the police to launch an investigation. If fraud has occurred from someone pretending to be from a legitimate business (such as a store or company), it’s also a good idea to inform them of what has happened.

Man reporting credit card fraud to bank

Looking for a credit card comparison?

If you’re on the hunt for a new credit card or want to see how your card compares with others available, we can help.

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This service is free to use and may help you make your decision. It always pays to compare, so let us help you!

Sources
  1. Australian Criminal Intelligence Commission (2 May 2019) – ‘Fraud’ – Accessed 2/3/2020

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