The odds that you’ll discover a phony credit card charge are on the rise, as is the likelihood of the suspect transaction arising from an online purchase. Last year, online credit card fraud jumped by 40 percent, which experts attribute in large part to the adoption of chip cards in the U.S. By thwarting in-person fraud, that development has encouraged more scam artists to instead commit their crimes online.
If you find a suspicious transaction, don’t panic. Fortunately for you, credit card companies largely shoulder the financial burden of unauthorized credit card charges. By law, you’re only on the hook for $50, and it’s unlikely you’ll even be dinged for that much.
Now you’ve relaxed a little, it’s time to take action. Here are five steps to protect your personal finances from further damage once you find a bogus charge.
Let Your Issuer Know—And Fast
If you find a peculiar transaction, call your credit card issuer right away to report it—that’s if your issuer didn’t alert you first. Your issuer will ask you to verify the most recent transactions to make sure no other suspicious activity was recorded.
Your issuer will close your current credit card and issue another one with a new number within days. If your account has any authorized users on it, the issuer may also send them new cards, too. Confirm that the new card is linked to the payment history of the old card account, so they appear as one on your credit history. And don’t forget to update any recurring bills with the new card number.
Consider Reporting The Incident To The Credit Bureaus
It’s additional work, but in certain circumstances, such as a rash of incidents on your cards in a short time, you may want to contact the three major credit-reporting agencies—Experian, Equifax and TransUnion—to let them know about the credit card fraud. This can be done online or over the phone. The bureaus will place a fraud alert on your credit report. This alert tells lenders that you’re a potential fraud victim, and that they should take extra steps to verify your identity before issuing new credit.
A fraud alert can stay on your report for 90 days or you can extend it for seven years. Both alerts are free, but you must submit a police report for the seven-year alert. If you want more protection, you can put a credit freeze on your account, which keeps lenders from pulling your credit report or score. This makes it nearly impossible for fraudsters to open a new account in your name. The downside is that you will need to unfreeze your report before you can apply for any new credit. Identity-theft victims typically can get a credit freeze for free, but others must pay a small fee—between $2 and $10—to freeze or unfreeze their report. Fees vary by state.
When you place a fraud alert on your credit report, you will get a free report as well. This doesn’t count towards your annual free credit report under federal law. Check your credit report for any unauthorized accounts. Make sure your personal information is accurate, too. If anything looks funny, report it to the credit bureaus. File a police report if you find an account that you didn’t open. Check your credit report again several months later or sign up for a credit-monitoring service to keep tabs on changes in your credit report. Oftentimes, companies that experienced data breaches will offer free credit monitoring to victims—use it.
In the future, be sure to use best practices with your credit card. Opt for two-factor authentication when available while shopping online to make it more difficult for scammers to take over your accounts. Consistently update your online passwords to protect your financial information from data breaches. Consider password managers to help you remember your unique passwords. Always check the security credentials of online retailers before making a purchase with your credit card. Being smart with your cards can prevent future headaches.
Be On The Lookout
The key is to stopping credit card fraud is to spot it first. The good news is that your credit card issuer is helping on this front because it bears the loss burden. Last year, banks upped their vigilance to unprecedented levels, Javelin Strategy & Research noted, even going so far as to infiltrate online criminal communities to help fight fraud.
But you can be our own watchdog, too, by regularly and carefully checking your recent transaction history for any fraudulent charges. A fraudster only needs your card number to make purchases, so fraud can happen even if your card is tucked in your wallet. Signing up for alerts—either via email or text message—is another way you and your issuer can flag any odd transactions in real time.