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Part of the Series Guide to Financial Crime and FraudTypes of Corporate Financial Crime and Fraud
Individual Financial Crime and Fraud
Detection of and Liability For Financial Crime and Fraud
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If you notice charges on your credit card that aren't yours, call your bank immediately to report it and have the card canceled. Your credit card number could have been picked up by an employee at a company where you purchased goods. Often, the fraudulent purchases are made online, but this is not always the case as your card could have been cloned.
The good news is that consumers are not typically responsible for the amounts lost in cases of credit card fraud. The Fair Credit Billing Act limits the liability to $50, and oftentimes, there's no cost at all.
In today's digital world, credit card fraud and ID theft continue to rise. In fact, according to the Federal Trade Commission, credit card fraud is the most common form of identity theft in the U.S. as of 2023.
Around 151 million Americans, or 65% of credit and credit-card holders, have been fraud victims during their lifetimes, according to Security.org’s 2023 Credit Card Fraud Report, up from 127 million the prior year.
Card fraud is expected to reach $35.79 billion worldwide in 2024, and increase to $43.47 billion by 2028, according to the Nilson Report.
Card-not-present fraud is a type of credit card scam in which the fraudster does not physically present the card to the merchant during the transaction. Card-not-present fraud can occur with transactions that are conducted online or over the phone. It is theoretically harder to prevent than card-present fraud because the merchant cannot personally examine the credit card for signs of possible fraud, such as a missing hologram or altered account number.
In the event that your credit card is stolen in the United States, federal law limits the liability of cardholders to $50, regardless of the amount charged on the card by the unauthorized user. In today's world of electronic fraud, whether the physical card or just the credit card account number is stolen and the theft is reported before any charges are made, federal law guarantees that the cardholder has a zero liability to the issuer. The terms and conditions of your cardholder agreement often spell out the details.
As a cardholder, you should notify the issuer immediately if you notice that your credit card is missing or stolen. This early notification will give the issuer time to help you with the following:
You should also check with the three major credit reporting agencies and obtain a copy of your credit report to be sure that nothing else has been accessed fraudulently.
According to the Fair Credit Billing Act, consumers have 60 days from the time they receive their credit card bill to dispute a charge with a card issuer. Charges must be over $50 to be eligible for dispute. They may be unauthorized, display an incorrect date or amount, or contain calculation errors. If a good or service was not delivered, that charge can be disputed.
The card issuer then has 30 days to acknowledge receipt of a complaint, and has two billing cycles to complete their investigation; during that time the issuer is not allowed to try to collect the payment, charge interest on it, or report it to credit bureaus as late. These limitations only apply to the disputed payment, not other charges made during the same billing cycle, which can still accrue interest and be reported as late if not paid.
This type of insurance is unnecessary because of the federal limits in place. Oftentimes, your bank or credit card company will have identity protection or fraud protection services already in place just by being a customer. Third-party companies that offer credit and identity theft insurance can be expensive and often simply follow the same steps that you would in reporting unauthorized spending on your card.
But beware: some scam artists try to sell $200-300 credit card insurance by falsely claiming that cardholders face significant financial risk if their cards are misused.
A great way to monitor activity on your accounts is to order your credit reports for each credit card reporting company. In fact, federal law states you are allowed one free credit report per year, but if your card has ever been stolen, you may be able to get your reports for free more frequently. Some experts recommend ordering one report every four months, in essence staggering requests via each of the main companies. This is a great way to keep a lookout for fraud. A weekly or monthly check-in of credit activity via your card's main website can also provide insight into any potential fraudulent activity.
Remember, if someone steals your card and rings up hundreds of dollars in charges, you are not on the hook if you report the missing card promptly, although it can take time to sort out the charges and get reimbursed. Make sure to contact your credit card company as soon as the fraudulent charges are discovered, and make sure to monitor your credit report and other cards to ensure nothing else, like another card, has been stolen too.
If you are lucky and have never been a victim, take immediate steps to make yourself less susceptible to credit card thieves. Order your annual credit card reports, monitor your bills and charges, and always take the time to call your credit card company if anything suspicious shows up. For those especially worried about credit card fraud, one of the best credit monitoring services could provide some needed peace of mind.