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How to Avoid Credit Card Scams

How to Avoid Credit Card Scams

*Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.

This article was last updated Jul 30, 2020. Terms and conditions may have changed. For the most accurate information, please consult the issuer website.

As sophisticated scammers invent new ways to steal personal and financial details, consumers are being forced to keep a wary eye on everything from credit card and banking statements to email inboxes and caller I.D. notifications.

Credit card scams, in particular, are on the rise, despite major security upgrades, such as EMV (Europay, MasterCard and Visa) chip card payments and enhanced cybersecurity. According to the Federal Trade Commission (FTC), for example, the number of identity theft victims reporting credit card fraud is five times greater in the first half of 2020 than the same period in 2015.

Meanwhile, separate research from the Better Business Bureau (BBB) has found that scammers continue to find fresh ways to dupe people into sharing their most sensitive personal and financial details. At the peak of the COVID-19 crisis, for example, scammers have created fake websites purporting to sell health essentials, such as masks and hand sanitizer, and extracted credit card numbers with bogus promises of COVID-19 testing kits. The FBI’s Internet Crime Complaint Center has also found that online extortion scams have substantially increased during the pandemic.

Analysts at the financial advisory firm Javelin predict that financial scams will only accelerate in the coming year as the global economy reels from pandemic-related losses. “Criminals become more active during times of economic hardships,” wrote Javelin researchers in an April 2020 report. So it’s crucial to protect yourself by staying alert and on guard for scams.

Your card may protect against fraud charges, but not ID theft

Most credit cards offer zero liability protection, shielding you from having to pay for unauthorized transactions, and respond to fraud complaints quickly.

But resolving more extensive forms of identity theft can be time consuming, especially if personal details, such as Social Security numbers, were also stolen.

Learning that your private details are accessible to strangers is also stressful, even if you don’t lose money. A retrospective survey by the Identity Theft Resource Center, for example, found that many victims of the Equifax Data Breach felt haunted by the experience, with most respondents admitting to feeling anxious, violated and unsafe.

Other financial scams, such as account takeover fraud, can be even more devastating, especially since victims are often forced to pay for at least some of the out-of-pocket damages. According to Javelin’s 2020 Identity Fraud Study, fraud victims lost a collective $3.5 billion in 2019.

How do credit card scams work?

Financial scams take many forms, depending on the scammer and the level of security they’re trying to hack. EMV chip card technology, for example, makes it harder for criminals to use fake cards at checkout or lift financial details from a card’s magnetic stripe.

However, scammers have adapted to these protections by turning to card-not-present fraud in greater numbers and by breaking into bank accounts.

Other scams are lower tech, relying almost exclusively on the age-old tactic of misleading people into sharing their financial information.

The best way to protect yourself from credit card scams is to educate yourself so that you know what to look out for and when to be suspicious. Here’s a closer look at just some of the credit card and identity theft scams targeting consumers.

6 most common types of scams

1. Fake bank emails

What the scam is: A fake bank email scam is a classic phishing scam. A scammer sends an official-looking email to you pretending to be your bank and tries to get you to respond in a way that lets them gain access to your information.

Depending on the scam, the email might ask you to verify your financial details, click a bogus link that causes malware to be downloaded onto your computer or call a fake number to take advantage of an offer. According to the FTC, sending fake emails from authoritative institutions is a common tactic scammers use to gain people’s trust and dupe them into responding.

How to avoid being scammed: Don’t respond to any email asking for your personal or financial information. If you’re concerned that the sender may really be your bank contacting you, log into your bank account separately to check for a secure message or call your bank directly. The BBB also suggests evaluating an email to see if it looks like an email your bank has previously sent. Poor spelling or grammar, inconsistent graphic design, generic greetings and invitations to click on a link to update account details are all red flags that should make you think twice about responding to it.

2. Skimming

What the scam is: Skimming is a tactic that scammers have long used to lift credit card details encoded in a card’s magnetic stripe. Criminals will attach a small inconspicuous device to card readers that can copy all the data encoded in your card’s magnetic stripe without you noticing anything unusual. Fraudsters can then use this data to create a fake card.

According to the FBI, some gas station skimming devices are even placed inside a fuel pump’s card reader.

Skimming devices typically require contact with your card’s magnetic stripe. So skimming is harder to accomplish in stores and restaurants that have switched to EMV chip card payments.

However, some gas stations are still using older technology, which has helped fuel ongoing reports of gas station skimming. Gas stations have until April 2021 to upgrade to EMV technology before being held liable for card fraud.

Scammers also target ATM machines with skimmers that collect card numbers. So watch out when you’re stopping by an ATM to pick up some cash. An ATM may also be fitted with a tiny camera to copy your PIN.

In addition, the BBB reports that hackers are stealing online shoppers credit card details in a similar way. The BBB calls this e-skimming: hackers install malware on a retailer’s site and use it to lift people’s financial details.

How to avoid being scammed: Avoid swiping your card if possible. Most payments in the U.S. are now made with EMV chip credit cards. However, you may find a smaller retailer still using older technology. If you can, pay in cash.

The FBI also recommends evaluating a card terminal or ATM for any signs of tampering. If a card insert looks funny to you, has unusual attachments or residue on the surface or is larger than it should be, then that could be a red flag.

In addition, try using gas pumps that are closer to the cash register, says the FBI, since they are less likely to be compromised.

If you need to enter a PIN, hide the numbers with your hand just in case there’s a hidden camera.

3. Shimming

What the scam is: Shimming is similar to skimming, but instead of lifting data from a card’s magnetic stripe, it copies it from the card’s chip. As with skimmers, criminals steal the data by attaching a discreet shimming device to a card reader and saving the information that it copies.

How to avoid being scammed: Shimming devices may be harder to spot since they are widely described as thin and paperlike. However, the BBB says that you may want to cancel your transaction if your card doesn’t easily slip through the card reader. If it gets stuck, press cancel and call for help.

4. ‘Get a lower rate’ advertisements

What the scam is: Credit card rate reduction schemes are a classic snake oil scam where con artists try to trick you into thinking they can get you a lower APR than you can get yourself.

A scammer may try to con you with an email promotion or sales call. Or they may target you with a robocall.

According to the FTC, many scammers are leaving voicemail messages on people’s phones promising a lower APR in exchange for an upfront fee. They may promise to have special connections or methods that help persuade card issuers to give you a break. However, the FTC has found that they rarely deliver on their promises.

Some scammers may also target you with fake bank emails or calls from bogus customer service representatives promising you an interest-free promotion or other one-time deal.

How to avoid being scammed: Call your credit card company yourself, rather than rely on someone else to do it for you. If you’ve been a good customer and have good credit, your lender may be willing to negotiate with you.

If you are struggling and need financial relief, then you are better off calling a nonprofit credit counseling agency for help, rather than work with a for-profit company making dubious claims.

It’s also a good idea to call your bank yourself if you receive a promotional offer through your email, such as a 0% APR on balance transfers. Although the promotion might be from your lender, you may still want to avoid clicking on any links, especially if you’re not 100% sure the email is from your card issuer.

5. Account text alerts with malicious links

What the scam is: Text message scams, also called smishing, are another common tool fraudsters use to gain illicit access to people’s personal information.

Similar to an email scam, a fraudster might send you a text message pretending to be a company you know, such as your card issuer alerting you to suspicious activity on your account. The text might ask you to click on a link to verify or fix the issue and then drop malware on your phone.

Scammers have come up with a number of ways to dupe people into responding to their text messages. Some have even gone so far as to send fake invoices, asking consumers to call them to see if you actually authorized a purchase.

How to avoid being scammed: Screen your messages. If you’re receiving messages from a number you don’t know, try searching the number to see if it matches a business’s contact information. Don’t click on any links and avoid calling a number until you have verified it is real. If you do return a call, firmly end the conversation if it sounds suspicious or if they begin asking you for sensitive personal details.

6. Phone calls

What the scam is: Phone calls are an especially common tool for taking advantage of unsuspecting consumers. The BBB has recorded a wide variety of phone call scams, ranging from classic phishing scams to impostor scams designed to scare people into giving up their personal information.

For example, a scammer might pretend to be an aggressive debt collector or a law enforcement officer warning about an upcoming arrest.

How to avoid being scammed: Use the same tactics you use for screening text messages and avoid answering calls from unfamiliar numbers. Before calling back, verify the number with an online search. And if you do answer the call, watch out for sketchy signals, such as a long pause before the caller starts talking.

Don’t let down your guard if the phone number appears to be from your hometown. Scammers can spoof you by faking the number on your caller ID.

What to do if you’ve been scammed

First, contact your bank or lender. Then reach out to law enforcement. You can also file reports with the FTC and the Federal Communications Commission (FCC). Once you’ve reported the scam, take some time to figure out the scam’s financial consequences.

If your credit card details were stolen and used to make a fraudulent purchase, you’re unlikely to have to pay for it yourself. The Fair Credit Billing Act caps the amount credit cardholders must pay for unauthorized charges at $50. But most card issuers offer zero liability, meaning you won’t pay anything as long as you report the fraudulent charge to your lender.

It’s not so easy with debit cards. Some debit cards also offer zero liability protections. But if your bank or credit union doesn’t offer that, you’ll need to catch the charge quickly to avoid having to pay for all or most of it.

Unlike credit card fraud, debit card fraud is only protected if you report the fraud within a specific time frame. For example:

  • Your losses will be capped at $50 if you report the fraud within two days of learning your card or funds were stolen.
  • If you catch the fraud and report it within 60 days of receiving the affected billing statement, the most you’ll lose is $500.
  • If you let more than 60 days pass since you received a bill with unauthorized charges, you won’t get any relief from the fraudulent charges.

That’s why it’s so important to regularly scan your bills for incorrect or unauthorized charges. The faster you report a problem, the more likely you are to avoid long-standing problems.

Once you’ve disputed the incorrect charges on your cards, set up fraud alerts to make sure no one else opens an account in your name.

Read Credit Card Security: 10 Tips to Keep Your Information Safe

Steps to take to avoid being scammed

Once you’ve educated yourself about different types of scams, keep an eye on the Better Business Bureau’s alerts of new and ongoing scams.

In addition, practice good security habits. For example:

  • Remain cautious with your emails, phone and financial information.
  • Routinely change your passwords.
  • Don’t click on links from senders you don’t recognize.
  • Don’t share your card information with people you don’t trust.
  • Call your lender or log into your account before accepting an offer.
  • Only shop with retailers you trust.
  • Use your credit card rather than your debit card for online purchases

Read Why it’s Smart to Use Credit for Purchases

If you don’t plan on applying for credit anytime soon, it’s also a good idea to set up a temporary credit freeze on your reports. You can easily unfreeze them.

Locking your credit reports makes it impossible for identity thefts to open credit accounts in your name.

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