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In its simplest form, credit fraud involves someone else's use of your credit to make purchases or cash advances. Though often damaging, such cases are normally stopped when you report your card as missing.
No card necessary
Other types of credit fraud involve your account information but not your physical card. Such cases may be more damaging, since you may not realize anything is wrong until you notice unfamiliar charges on your monthly statement. Knowledge of your account number, expiration date, Social Security number and billing address may be much more valuable to a thief than the card itself. In the most advanced form of credit fraud -- identity theft -- someone can use your personal information to take over your credit accounts and open new ones.
How to prevent credit fraud
There are several ways for someone to get your credit card information. They may get it from the card itself, find it on receipts or monthly statements you've thrown away, steal it from your mailbox, or get it through an Internet- or telephone-based scam. The following tips will minimize your risk:
- Whether on the phone, by mail, or on the Internet, never give anyone your card number, Social Security number, or other personal information for a purpose you don't understand.
- Treat your credit cards like cash; don't leave them in unsecure areas.
- Shred any documents that show your credit card information, Social Security number, or driver's license number before throwing them away.
- Destroy unwanted offers of preapproved credit cards before throwing them away.
- When you receive a new card, sign and activate it immediately.
- When choosing a password for an account, avoid such easily obtainable information as your mother's maiden name.
- If you don't receive your credit card statement on time, notify the company immediately.
- Don't carry your Social Security card. Keep it in a safe place.
- Memorize your PIN numbers instead of carrying them with you.
- Don't write your credit card number on checks.
- Get rid of credit cards you don't need.
- Use ID Guard to monitor your credit report for potential signs of fraud.
If you suspect credit fraud, immediate action is imperative. For instructions and advice, see responding to credit fraud.
Limited protection
Because credit card companies must limit consumer responsibility to $50 in most cases of credit fraud, and because many new cards include "zero responsibility" protection, some people think there's no reason to worry about credit fraud. But in its most advanced form -- identity theft -- credit fraud can cause wide-ranging long-term problems. Identity thieves use your personal information to take over your credit accounts and open new ones. They may even use your good credit to get a job, take out a car loan, or rent an apartment.
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