Credit card fraud has been a enormous problem since the credit card was first introduced in the 1950’s. Before the internet, the main way that this type of theft was committed was by stealing and using the physical card.
Today, this type of theft has grown to become much more sophisticated. Organized hacking groups attack websites specifically to steal personal and credit card information. Illegal websites that are hosted in foreign countries, are used sell this data to the highest bidder all over in the world. These activities generate huge profits for those committing theft and huge headaches for those that have their information stolen.
Credit card and I.D. theft has become a billion dollar per year problem that law enforcement, credit card companies, and consumer groups can not seem to get a handle on. It is extremely common for consumers to have experienced this type of theft, often multiple times in their life. Theft can cause loss to finances, reduction in good credit score numbers, and stress from dealing with a difficult situation. Fraudulent charges are usually taken care of by credit card issuers fairly quickly, but consumers always end up paying for them in the end with higher fees.
How Do Frauders Get Your Credit Card Information?
One way that credit card thieves can get personal information is through a process called phishing. Frauders and identity thieves send out millions of spam emails under the guise they are from a bank or credit card company. The emails make a consumer believe that their is “trouble with their account”. They are then prompted to enter their C.C. number, pin, and/or social security number. Sometimes a link in these phishing emails will redirect users to a site that replicates the exact look of their bank or credit card company. The purpose of these “fake” sites is solely to collect usernames and passwords. If you believe that you have accidentally entered your username and password into a site that is not legitimate, your should contact the fraud department immediately.
It can be very confusing when banks and credit card companies send out legitimate emails. So how can you tell the difference between a “phishing” site and the real site? One way that you can tell a fake site, is to check the root of the domain.
- For example, the legitimate domain for American Express is www.americanexpress.com. A phishing site trying to steal your data might look like this: americanexpress.xyz.com.
- Notice that the root domain for the fraudulent site is “xyz.com”, not “americanexpress.com”.
Another indicator that you are on the real site, is that the url should start with “https://, not http://”. HTTPS means that the site has a security seal. Phishing sites will most likely not have a valid security seal. Most browsers will also show a “green lock” to the left of the url, showing that you are on a secure site. (visit americanexpress.com, for an example)
Another way that hackers can get passwords and credit card data is through computer viruses. Viruses called “keyloggers” track the keystrokes entered into infected computers. If a computer is infected by this type of virus, passwords and credit card information are recorded and transmitted to a perpetrators via the internet. To prevent keyloggers or other types of malware from infecting a computer, it is important to regularly run anti-virus software. You should also try to avoid infection by not downloading (or executing) email attachments from unknown senders.
How to Spot Fraud or Theft
If fraud is caught in its early stages, major problems and damages can mostly be avoided. Monitoring bank and credit card statements closely can help you catch any fraudulent charges that you did not make. If you see payments you do not recognize, contact your company’s fraud department immediately.
Another important thing you should do is keep close tabs on your credit history. You can monitor this history by ordering a credit report yearly from AnnualCreditReport.com. This website is run by the 3 main credit bureaus (Equifax, Transunion, Experian) in order to comply with the Fair Credit Reporting Act. This act allows all consumers to have access to their credit information absolutely free, once each year. By visiting this site, you can check your reports at all 3 bureaus and make sure no fraudulent accounts have been opened under you name. Checking this information at least once per year is recommended to watch for fraud.
Another service that might help you watch your credit, is a credit monitoring service. This service will alert you by phone or email every time a new credit card or loan is taken out in your name. Some programs will also insure you in case i.d. theft is committed while enrolled in this program. The amount of insurance depends on the program and the teir of service you apply for. Prices for a credit monitoring services vary, but usually range between $5-$20 per month.
As credit card and identity theft become more commonplace, it becomes necessary to take proactive steps to prevent it. Regular monitoring of financial information is important to stop fraud before it causes serious damage. If not handled properly, this theft can affect your credit rating and cause you to be denied for loans or credit cards. All credit card companies have fraud departments and will work with you to handle fraud, but preventing it is always the best course of action.
Ross has taken a life long interest in personal finance and runs the website GreatCreditScore.org. This site focuses on providing free information to consumers about credit, debt, and investing.
(Photo by xJasonRogersx)