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How to avoid credit card scams

By Matt Mayerle
Modified on February 20, 2024
credit card scams

Being scammed out of a significant amount of money is not something anyone wishes to experience. Unfortunately, credit card scams are still widespread, with the Federal Trade Commission reporting an uptick in credit card fraud and identity theft in recent years. 

Scammers are constantly updating their techniques and technology to catch consumers unawares. The best strategy for protecting yourself, your credit card accounts and your sensitive information is to stay up to date with the latest tactics used by scammers so you can identify red flags when they arise.

Knowing the ins and outs of how scammers execute their schemes and how sensitive information gets stolen will give you the tools you need to decrease your chances of becoming a victim yourself.

Knowing Which Credit Card Company to Work With

The best credit card companies play an essential role in protecting your personal and credit card information. You want to be sure you are working with a trusted credit card company that does their due diligence in ensuring your privacy and security as a customer. Not all credit card companies are created equal. 

Before deciding to go into business with new credit card issuers, we highly advise you to do a fair amount of research on them. Take a look at reviews of the credit card issuer by consumers online to see the general consensus on how they handle account security. It might be helpful to read reports on how they handle transaction disputes, stolen information, and credit card fraud claims.

Common Credit Card Scams To Look Out For

It is far easier to avoid a credit card scam if one knows what red flags to look out for. By identifying suspicious activity, you can get yourself and your money out of harm’s way. We will break down the six most common credit card scams and how to identify them. 

If you can keep these warning signs in mind and practice constant vigilance, you should be able to maintain the safety of your hard-earned cash and sensitive personal information.

Credit Card Skimming

The skim scam is a classic credit card scam – one you have likely heard of already – that has persisted despite updates to credit card technology. A skimmer is a small electronic device that scammers hook to credit card readers at ATMs and gas pumps. The skimmers read the credit card information on the magnetic stripe when you swipe or insert your card. 

Skim scams are particularly tough to protect yourself from as the naked eye can’t easily identify the newer versions of the small electronic device attached to card readers. This type of scam is especially common in tourist hot spots during peak travel times.

Phishing Scams

The phishing scam is an incredibly versatile scam and likely one you’ve been warned about many times. It can take different forms and uses a variety of manipulations. But, essentially, a phishing scam always consists of a fraudulent company or person contacting you through email, text message, or phone calls to extract personal details and credit card information from you.

Phishing scams conducted through phone solicitations and emails can be surprisingly convincing, which is why they are still such common scams. Phishing scammers use all manner of tactics to convince you that they are a credit card issuer or a financial institution you can trust. 

They might leave you a recorded message claiming time sensitivity, leading you to panic and not think thoroughly before passing over sensitive information. You ought to always think twice before trusting an unknown number or suspicious email, no matter how official it might seem.

Unsecure Wi-fi Scams

Using public wi-fi puts you at a high risk of having your card information stolen. Scammers often monitor public wi-fi or even set up their own wi-fi hot spots to lure individuals into providing personal details willingly. 

You might be interested in paying for temporary hot spot usage in a cafe or at an airport, so when you are prompted to input your credit card number, you don’t think twice about it. Only to find out the hot spot is actually fake, and you’ve had your card information stolen.

Other times, the hot spot might be free, and you can log on without inputting any details. However, the scammers could be monitoring your use of the wi-fi on the public server and collecting the information you divulge on the websites you visit. Stealing things like passwords to your financial accounts and your credit card number as you make an online purchase.

Overcharge Scams

Consumers are doing their shopping online more than ever before, so it’s incredibly easy for scammers to convince people that a recent online purchase was overcharged. The overcharge scam targets the inherent gratitude consumers feel for those expressing a wish to save them money. 

These scammers present themselves as legitimate businesses and use the excuse of reversing the overcharge to your credit card account to ask all sorts of questions intended to glean sensitive personal information. 

Charity Scams

Likely one of the most unfeeling scams of all is the charity scam. Charity scams exploit the human desire to help those in need to line the scammer’s pockets. They often pretend to be a reputable charity of some sort and will call or email asking for funds to support a cause. These scams become more common in the aftermath of a natural disaster or widely-known tragedy. 

Thinking you are contributing a charitable donation, you might offer your credit card numbers over the phone or online only for money to be taken from your account with no such philanthropic intention.

Interest Rate Reduction Scams

Commonly delivered as a robocall or recorded message, interest rate scams claim they have a special offer for you to reduce interest rates on your open credit card accounts. Saying they have the ability to lower your monthly payments on an existing account or a limited-time interest rate reduction preys on the instinct to jump at money-saving deals.

Often they will rush a decision saying their offer is only available for a limited time to get your account number before you have time to think about it. Many scams function in a way to get the victim into a flight or fight mode through pressure tactics where they act before thinking, giving the scammer what they want. 

Best Practices to Avoid Credit Card Scams

Now that you know the most common methods used to commit fraud with credit cards, you can use this knowledge to arm yourself against them. There are several best practices that most financial experts agree consumers should abide by to avoid becoming a victim of a credit card scam. 

Make Sure Your Credit Card Details Are Secure

Whenever you are about to input your credit card details, double-check that the website you are on is secure. If a website is appropriately outfitted for security and privacy, you will see a little padlock symbol in the far left corner of the address bar before the “www.” of the URL. Don’t input your credit card number or other vital information unless the website is secured. 

Monitor Your Credit Card Activity

Monitor your bank account and credit card statements to identify any fraudulent purchases and unauthorized transactions. Checking your credit card accounts regularly should be relatively simple, especially if your credit card company has a mobile banking app. You can usually see your credit card balances with just a few taps of your finger. It is also possible to have the app give you real-time alerts for possible suspicious activity on your accounts. 

Checking your credit card statement to see if there was a cash advance or a credit line increase request you did not create is obviously not a preventative measure, but the sooner you know, the easier the problem will be to fix. 

Check Your Credit Report

The credit bureaus who compile credit reports will have more information than might be included in your credit card statement. Checking your credit report regularly could help you catch identity theft early on. Any entries on your credit report of applications or new accounts in your name that you don’t recognize could indicate that you may have been scammed. 

Don’t Shop On Public Wi-Fi

If you can avoid it, don’t do any online shopping on public wi-fi. Don’t input card details, bank account passwords, or other personal information while browsing on non-private wireless internet connections. Ask yourself whether it can wait until you have a secure connection, and if it can’t, consider creating your own hot spot with your phone rather than the public wi-fi. 

Use Tap-to-Pay Services

Utilizing your mobile wallet on your smartphone could help you avoid some of the most common scams, like the skim scam. Doing tap-to-pay when you check out at a store enables you to bypass the card readers or at least have fewer transactions that put you at risk. 

A significant number of businesses now offer tap-to-pay services. Simply add your debit card and credit card to your mobile wallet, and you will be all set for a majority of purchases.

What To Do if You’re a Victim of Credit Card Fraud

If you have already been victimized by a scam or credit card fraud, there are a few actions you should take right when you realize what has happened. 

Contact Your Credit Card Company

First, you should contact your credit card issuer and freeze your credit card to ensure you don’t lose any more money. You should be able to dispute fraudulent purchases made with the use of your credit card with their consumer services department.

Report the Credit Card Fraud

Next, report all the information you have on the scam you experienced to the Federal Trade Commission government agency so they can investigate further to protect future potential victims. You will want to report any and all identity theft that occurred in as much detail as you can to the FTC so they can advise you further. If there was a fraud on your credit reports, the Consumer Financial Protection Bureau suggests that you place a fraud alert on your reports from all three credit bureaus. You can even put a freeze on your credit reports if need be. 

There has been an abundance of opinions expressed on how to best protect yourself from credit card scams. However, most agree that knowledge and vigilance are your strongest tools for keeping yourself safe.

References:

5 Common Credit Card Scams and How to Avoid Them
Credit Card Scams: How to Recognize & Avoid Credit Fraud
The 5 Biggest Credit Card Scams Going Around Right Now — and How to Protect Yourself

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