Credit cards have become a staple payment method for countless people via mobile phones or physical use. Today, transactions are carried out on digital gadgets, apps, and websites. While this significantly increases comfort and convenience, it leaves you vulnerable to crimes like credit fraud.
43% of individuals in urban India experienced credit fraud. Individuals may experience fraudulent purchases on their cards, destroying their financial security. However, there are steps you can take to ensure your personal and financial information is secure. In this article, we will explore what credit fraud is, the different types of credit fraud, and the steps you can take to prevent it.
What is Credit Fraud?
Credit card fraud occurs when another individual illegally uses an individual’s credit information to make purchases or withdrawals. It affects millions worldwide, mainly due to the rise of digital transactions. Credit fraud can devastate families and individuals, cause financial ruin, and lead to significant losses. This could be stolen credit cards, account takeovers, fraudulent email or telephone orders, counterfeiting, and more.
Besides affecting individuals’ financial standing, credit fraud negatively impacts the victim’s credit score and report. Solving the problem by contacting authorities and financial institutions is long and arduous. Credit card fraud protection is crucial. The best way to safeguard against credit fraud is to take the necessary steps to prevent it.
What are the Different Types of Credit Fraud?
In the modern era, several forms of credit card fraud exist. Some include:
1. Phishing
Phishing scams have become increasingly common, and you may even have workshops on detecting phishing emails in your workplaces. This scam involves people pretending to be agents (for example, customer support or insurance agents) who trick you into giving them your information. Phishing emails are also standard, containing links where your details will be stolen when clicked on. They may appear to be from legitimate financial institutions.
2. Skimming
Skimming devices, commonly called “skimmers,” steal credit card information from the magnetic strips on the backs of the cards. These devices are attached to card readers at stores, gas stations, ATMs, and other places. It is essential to check the device your card is being scanned before handing it over. After obtaining your credit card information, scammers can sell it or use it to make purchases themselves.
3. Stolen or misplaced cards
This is a prevalent form and cause of credit fraud. When you misplace or lose your credit card, or it gets stolen, it often ends up in the wrong person’s hands. Thieves can also go through discarded bills to find credit card details. Your credit information can then be used to make purchases until the card is cancelled.
4. SIM swapping
Another common form of credit fraud is SIM swapping. This occurs when scammers contact mobile operators pretending to be someone else, requesting a duplicate of their SIM. They will then deactivate the original SIM and can receive OTPs and other information to make online transactions.
How can you Prevent Credit Card Fraud?
Credit card fraud is a frightening occurrence. Luckily, there are several steps you can take to protect yourself from its repercussions. These include:
1. Keeping your credit card safe
Keeping your credit card and information safe is the easiest way to prevent credit fraud. When you receive your new card, ensure that it arrives in an untampered envelope. Sign the credit card as soon as you receive it. Protect it by keeping it safe in your wallet at all times, in a place where others cannot easily steal or access it.
If you notice your card is missing, contact the relevant authorities and have the card cancelled. Check your statements for suspicious purchases or purchases you have not made yourself. Lastly, the card should be put away as soon as possible after being used in public since scammers can take pictures of it to steal information.
2. Keep tabs on your transactions
Many credit providers will send emails and message alerts regarding credit card transactions. Make sure to check these alerts when they arrive. If you notice any unrecognisable purchases, contact your provider right away. Additionally, check your online transaction history to ensure no suspicious or unrecognisable purchases.
3. Ensure your information is safe
There are a few steps you can take to ensure your credit information can be accessed by fraudsters. For starters, avoid paper trails. Billing statements generally have your total credit card number printed. Before discarding them, black out the numbers or shred the statements. Additionally, all cancelled or expired credit cards should be shredded before discarding.
When it comes to digital transactions, ensure you never reveal sensitive information regarding your credit card over the phone or text. Frequently changing and memorising your PIN (instead of writing it down in easily accessible places) could also help prevent credit fraud.
4. Make sure your online transactions are legitimate
With increased phishing scams online, it is essential to ensure that the shopping websites you visit are legitimate. Phishing emails and websites often mimic actual financial institutions and retail stores. Make sure your purchases are from the actual website by looking at the address bar and ensuring there are no other websites or companies with similar names.
5. Report a lost or stolen card immediately
When a credit card gets lost or stolen, time is of the essence. The sooner the event is reported and the card is cancelled, the less likely there will be significant financial losses. This can be done by ensuring you have your financial institution or credit card company’s number on your phone.
6. Use RFID-blocking wallets
Recently, contactless payments have risen in popularity. Many cards can be tapped on the scanner without requiring the input of any pins or passwords. These types of cards are embedded with an RFID chip. Scammers can come near the wallet and make transactions. An RFID-blocking wallet can prevent these situations and make it harder for scammers to access your card.
Summing up
Credit fraud is a highly damaging crime that can affect your financial security and credit score. Credit scores are three-digit numbers that indicate an individual’s creditworthiness and are often used by lenders to approve or decline loan applications. Conducting a credit score check regularly and maintaining a good financial standing is important.
For expert guidance regarding your finances, visit Tata Capital’s website or download our app today!
04 December 2024
6 mins read
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