Today’s article comes from Mr Credit Card of www.askmrcreditcard.com and he is going to talk about how to spot a credit card scam. If you are looking for a credit card, I suggest you check out his best credit cards offers section.
Credit card scams are almost as old as credit cards themselves. The good news about credit cards is that the card holder is not responsible for most instances of fraud. You are protected from paying for any unauthorized charges and your only responsibility is to notify your bank in a timely manner. The burden of proof always lies on the merchant to document that you have in fact authorized the charge or charges.
The bad news is that there are plenty of ways that scammers can still try to sneak charges past unsuspecting cardholders. The classic case is when a fraudulent charge is brazenly attempted in the hope that someone will not take the time and effort to read every line on their bill, notice the charge, and call their bank to dispute it. The odds are in fact pretty good that a small but significant percentage of cardholders will not notice a charge, especially a small one. Sadly, many people will just pay their credit card bill on the assumption that all charges are legitimate.
How does a scammer get your credit card number?
The easiest way to obtain credit card numbers is to hack a database of a merchant. By obtaining numbers in bulk, criminals can make a lot of money by charging small amounts to thousands of accounts. Other ways to fraudulently obtain account information are through the lifting of information off of a card at a restaurant or hotel where the card may be processed out of your sight. Finally, credit cards are still stolen via good old fashion pickpocketing and break-ins.
A close cousin to fraudulent charges is the pre-acquired account scam. The idea is that instead of stealing your account information, a scammer can merely purchase it from a company that you legitimately did business with. On the internet, this may take the form of a pop up box that is offering you something that is seemingly free. In return, the fine print specifies that you are authorizing a third party to charge your card perpetually. Many otherwise reputable companies willingly participate in this scam.
Offline the scam takes the form of a mail solicitation, again offering you some sort of free service or perhaps even a check. The check is covered with fine print that indicates that cashing it will enroll you in some sort of travel or shopping service. The service is of questionable value at best, and your credit card will be charged every single month. Typically, the check will bear the name and logo of the otherwise reputable company that you originally gave your credit card to. The idea is to make you think that the offer is legitimate and is somehow backed by the known company. The fine print indicates that they are merely using the account information that the other company obtained, and that the scammer is really a separate entity. Sadly, these scams remain legal, while some credit card processors have vowed to crack down on them. Furthermore, such practices are against credit card merchant agreements, but the credit card processors often don’t care.
How Do You Avoid Being Scammed?
The easiest way is to avoid being a victim of a credit card scam is to review every line of your credit card statement every month. This is not as easy as it sounds. Many people rely on their credit cards for day to day purchases, and their credit card bill can contain hundreds of transactions a month. Worse, even legitimately authorized transactions sometimes look suspicious because the name on the statement may not be recognizable. Nevertheless, you still need to sacrifice several minutes of your time every month to scrutinize your credit card bill. This should be seen as a necessary activity that is part of the use of a credit card.
There are also a couple of credit card issuers that allow you to generate a one-time credit card number when you make a purchase online. That way, it adds an extra level of security. Issuers or credit cards that have this feature include Discover Card and Citicards.
Credit cards are an incredibly convenient financial tool and their security far exceeds the risks associated with using cash, checks, or even debit cards. They are incredibly secure, but they are not perfect. Almost by definition, people who have lost money from credit card scams are not aware of it. The key to avoiding scams will always be the proper detection of fraudulent charges, and your timely notification of your bank.
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Yeah, as a big budgeting fan, I enter every single charge into our monthly Excel sheet…it’s time consuming but worth it to us to know where we’re spending all our money.
Thankfully, I’ve only found discrpencies twice (two double-billings), but Discover made it easy to handle. I’ll continue to do my monthly checks just in case though…no reason to just give money away unnecessarily, lol.
This is so true, my brother had this little while ago, and they were running around the country just spending 40 or $50 on silly things like fuel and diners. It was the bank that spotted it and telephoned him and asked how he could be spending money in another city one is card was also being used two hundreds miles away!
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