Protect your finances from scams: Part 4. Credit card fraud
According to The Facts 2021 Report by UK Finance Fraud, losses due to fraudulent activities on UK issued cards reached £574.2 million in 2020. In the same year, a total of £983 million in card fraud was detected and stopped by card issuers and banks. Credit card fraud is a real problem; it's necessary to be aware of different types of fraud and take steps to protect yourself.
In Part 4 of the "Protect your finances from scams" series, we look at different credit scam types and precautions you can take for each. We also briefly look at who takes the hit if you are a victim of credit card fraud.
What are the main types of card fraud?
- Lost and stolen cards
- Stolen card details and phishing scams
- "Card not present" fraud
- Card Skimming
- Cash machine and ATM scams
What happens if you are a victim of credit card fraud?
Who is responsible if I am a victim of fraud?
What is credit card fraud?
Credit card fraud is a term used generally to cover fraud committed using payments cards, including debit cards, prepaid cards (or store cards) and credit cards. It can be fraud committed through the theft of your personal information associated with a card, card details, or the card itself. Fraudsters use these details to make purchases, payments and obtain funds, including loans, without your permission.
What are the main types of card fraud?
1. Lost and stolen cards
If your card falls into the wrong hands, it can be used to make purchases and payments. Contactless payments in the UK were increased to £100 from 15 October 2021, which means in-store purchases can be made up to £100 without entering a PIN. Your card details can also be online or over the phone to make payments.
What to do: Don't pass your credit card to anyone, and always keep it in a safe place. If your card goes missing, report your card as lost or stolen immediately, or if you have a mobile bank app be sure to cancel or freeze your card.
2. Stolen card details and phishing scams
These types of scams are typically committed using an unexpected email, message or call to steal your personal information, passwords or card details. The email (or call) is designed to appear genuine, generally from a well-known retailer or reputable organisation. Stolen personal information and card details are used to apply for loans or credits cards, make purchases or gain access to your account and money.
What to do: Never share your details. Never tell anyone your card PIN, your bank and even the police will never ask you for your PIN. Be wary of unexpected, unsolicited messages and calls. Avoid clicking on links unless you are confident of the source.
If you would like to know more about phishing, check out part 2 of this series: Common types of online scams
3. "Card not present" fraud
This type of card fraud is committed without the use of your physical card. Criminals use stolen personal information and card details to make payments online or sometimes over the phone. The fraud can continue for some time without you realising it.
What to do: Make it a habit to regularly check your card transactions and statements. Look for purchases you do not recognise if you use mobile banking or have a bank app. Set spending notifications, that way, you are alerted when your card is used. If you suspect any unusual transaction contact your provider immediately.
4. Card Skimming
Fraudsters take your card details to create a counterfeit copy or clone of your card. This is done by "skimming" data held on your card's magnetic stripe using a small handheld device. Fraudsters target busy places like bars or restaurants, where you may be distracted.
What to do: Don't hand your card over to anyone. Never share your PIN, and always cover your PIN with your other hand. With your PIN and a clone of your card, fraudsters will have full access to your money. As previously mentioned, check your transactions regularly and set up notifications to your mobile to know when your card is used.
5. Cash machine and ATM scams
Cash machines can sometimes attract criminals with the intent of stealing your card and PIN. Fraudsters may attempt to distract you, pretending to be well-meaning or helpful and often working in teams. Skimming at an ATM can also happen, using a device to clone your card and a camera to record your PIN.
What to do: If someone watching you or uncomfortably close to you, use another machine. Never allow yourself to be distracted while using a cash machine. Don't use a cash machine if you think anything unusual about it or signs of tampering. Always conceal your PIN, even if you don't notice anyone near you.
What should I do if I am a victim of credit card fraud?
Act as soon as you suspect something is wrong and contact your card provider or bank. You mustn't delay in getting your card blocked; this will stop further fraudulent charges from happening. And it will help in getting your money reimbursed by your card provider.
You should also report the matter to Action Fraud or call 0300 123 2040. Change all your PINs and passwords - more than one account may have been hacked, and your details for other accounts may be compromised.
Regularly check all your statements and accounts for any other fraudulent activity. Monitor your credit report too - credit reports should show if your details have been used to apply for loans and credit cards.
Who is responsible if I am a victim?
The Consumer Credit Act 1974 protects victims of credit card fraud. Normally you are not liable for unauthorised use of your card, and you should be able to claim your money back, except when you have acted negligently. For example, you knew about the suspicious activity, but you delayed reporting. Or they know you did not take reasonable measures to protect your card details or PIN. If your card was lost or stolen, you might be liable for the first £50, although most card providers may waive this fee if you acted quickly in reporting the card as lost or stolen.
Other policies may apply to other cards. For example, the Visa Zero Liability Policy protects you if your card (whether it's a credit or debit card) is lost, stolen or used fraudulently. Your bank should refund any money stolen from you due to fraud and identity theft unless they suspect you were negligent or acted fraudulently.
Summary
Credit card scams can be challenging to detect. But by taking precautions such as not passing your card or card details to anyone and not sharing your PIN will help protect you. Avoid unsolicited emails or calls, and be careful where you enter your card details online. Regularly monitoring your card transactions and checking your credit report for loan or card applications not made will help detect fraud. If you suspect anything, report it immediately to stop further fraudulent payments. Delaying or acting in a way that can be viewed as negligent may mean your card provider does not reimburse your money.