How to Prevent Credit Card Fraud

- by Erin Redfern
A Guide to Credit Cards in the UK – Chapter 10

Credit card fraud is very common. How can you stop it from happening to you? In this chapter we’ll explain what the common types of credit card fraud are and what you can do to keep your money safe.

Chapter 10, Credit card fraud and how to prevent it- Cashfloat Chapter 10, Credit card fraud and how to prevent it- Cashfloat

Even in the early days of credit cards, card holders and card providers have been victims of fraud. If you read Chapter 2 of this guide, you will remember the Chicago debacle, where a whole shipment of credit cards was stolen before they reached their intended destination.

This chapter will explore the prevalent forms of credit card fraud, and safety measures you can take to protect yourself.

Credit Card Fraud

In the early days, and still today, payments made to shops and restaurants, cash withdrawals and balance transfers have all been made fraudulently. Towards the end of the 20th century, there was an increase in online fraud and nowadays many instances of fraud take place online.

This change has necessitated a change in security measures as hackers have found new ways to access the details of credit card accounts either by online phishing, by creating fake online stores or by other methods. Phishing fraudsters often use convincing company logos and many people fall for scams. Not only do these email messages cause losses by card fraud, but they can also infect people’s computers with viruses. And, while new methods of online fraud are created, the old methods, such as card cloning or creating false applications still exist as well.

Credit card fraud is a continual problem for banks and credit card companies. It also causes severe difficulties for any cardholder who is a victim of a scam. Security measures for online shopping have been standardised, but fraud is still a problem and it is important to be vigilant.

If you have already been a victim of credit card fraud take a look at the Money Advice Service’s advice on what to do about it and what you can expect to be covered for.

The UK is One of the Worst Places for Card Fraud in the World

A survey conducted in 2016 identified the ten worst countries for card fraud in the world. The United Kingdom just made it onto the list, coming in at number 10. The reliance that people in the UK put on card payment and the strength of the economy makes card users a target to, both, con artists in the UK and internationally operating scams. Although India, Brazil and Mexico were all in the top ten as well it is generally the wealthy nations like the UK, Canada and the US who suffer the most from card fraud.

In the survey, respondents were asked if they had experienced card fraud (on any form of payment card) in the last 5 years. In the UK, 29% of people said they had. That is almost 1 in 3 people. This statistic should give you an indication of just how likely you are to have money stolen from your credit card.

Percentage of respondents who experienced credit card fraud between 2011-2016|Cashfloat Percentage of respondents who experienced credit card fraud between 2011-2016|Cashfloat

What are the Common Types of Credit Card Fraud?

We are all familiar with the possibility that our credit card could be lost or stolen and then used fraudulently by someone else. Indeed, this is a common way that card fraud is committed. However, many people won’t be aware of other fraudulent scams that take place. Here are some of the other ways that card fraud is committed:

How to Prevent Yourself from Becoming a Victim of Credit Card Fraud

During the first year of the coronavirus pandemic there was a rise in credit card fraud, as more people did their shopping online and fell victim to the latest online scams. In recent years, there have also been several high-profile breaches of security where major websites have been hacked, and customer’s data has been stolen. With the rise in online scams and with the traditional scams still existing there has never been a time to be more careful.

Next up, Cashfloat will look at the simple ways in which you can make sure that your credit card details are kept safe and that you don’t end up falling victim to credit card fraud.

Follow Cashfloat's 10 tips for credit card safety Follow Cashfloat's 10 tips for credit card safety

While the threat of credit card fraud is always with us, this shouldn’t necessarily mean that you should be reluctant to use or even own a credit card. If you follow some basic precautions, you should be able to keep your money safe. Here’s what to do:

  1. Keep your Card Safe
  2. Keeping your card safe is the most important action you can take for credit card security and to prevent any fraudulent transactions. Make sure you know where your card is at all times and don’t let anyone take it out of your sight. When using your card at an ATM make sure that, when you are typing in the PIN number, you keep the details away from anyone else who is around. NEVER give your PIN number to anyone else. After making a withdrawal from an ATM, take away the receipt. Always shred or otherwise destroy old statements and receipts containing your card number. Always make sure that the card is returned to you after making a purchase and don’t leave it anywhere that someone else could find it.

  3. Never Share your Card Details Unless you are Sure it’s Okay
  4. Criminals can be very ingenious and have learned plenty of ways to persuade people to reveal their credit card information. As we said earlier, phishing is a big problem. Always make sure that you are absolutely certain of the identity of anyone that you reveal your card details to.

    Never give your credit card details to anyone over the phone unless you have confirmed their identity and made the call for payment yourself. The same applies to contact that you receive by email or post. Make sure that you contact the relevant company and confirm that they contacted you. After you have done so, make sure you contact them through the correct channel in order to make a payment. This applies equally to anyone who contacts you, whether they be finance companies, such as banks, credit card companies, payday lenders or brokers, or whether they are utility providers or private companies, such as Sky TV.

    Only make an online payment if you see the padlock icon  in the address bar- Cashfloat Only make an online payment if you see the padlock icon  in the address bar- Cashfloat

  5. Shop Safely Online
  6. With online fraud being such a danger, it is important that everyone adopts safe online credit card habits. Before shopping online, you should research the company that you are buying from and make sure that they are legitimate. Trustpilot is a good place to check website legitimacy. After ensuring that a website is legitimate, make sure that payments are secure when you make them. Secure payments should have a padlock in the address bar, next to the web address and the address should start with https:// (with the ‘S’ standing for ‘secure’). It is also important to make sure that your antivirus and computer software are up to date. If your antivirus is not functioning properly, you could have your card details stolen by a virus or malware. On top of this, make sure that the Wi-Fi you use is secure when you make a payment. Wi-Fi provided in public places, such as cafes, is generally not safe to use.

  7. Beware of Skimming Devices
  8. As we said earlier, skimming is a common method by which fraudsters are able to copy people’s card details in order to make clone or copy cards. Skimming is normally done with devices which are attached to other legitimate devices which accept payment by card. Card users should keep an eye out for these. Skimming devices will often protrude unnaturally from the device that the cardholder is trying to use. Before you insert your card into anything, make sure that you check it first and if you suspect anything, then make your payment in another way.

  9. Check your Credit Card Statement and be Careful with Paperwork
  10. This is one of the boring parts of credit card security, but it is very important to check your credit card statement for any transactions that you did not make.

    The most important thing to check is that all the transactions listed are ones that you recognise. Sometimes a transaction may show under a different name to that of the shop that you bought an item from and this can make things confusing. This might be because the shop is part of a larger group of companies. However, if you are aware of or have a record of what things you bought and when, then you should be able to work things out. Ideally, you should keep all credit card receipts and check the amounts against the ones listed on the statement.

    If there are any invalid transactions, you should ring your credit card company and find out what has happened. Banks and card companies have a dedicated team of credit card security staff who will be able to answer your queries and resolve any problems.

    • Shredding Documents And Statements
    • Shredding documents and statements that hold account numbers, names and addresses or other personal details can help prevent not only credit card fraud, but identity theft as well. Fraudsters may be able to steal enough of your credit card information from your paperwork in order to steal money from you. Alternatively, thieves who steal people’s personal information may be able to clone someone’s identity and use this to commit other crimes, such as application fraud.

    • Receipts For Purchases And Cash Withdrawals
    • Have you ever been to an ATM and seen the last customer’s receipt sticking out of the machine? This is common practice but one that you should avoid. Receipts do not hold the full account number of the card. Nevertheless, they can be useful to sophisticated criminals who can extract information from the details held on the paper slip.

      Therefore, as a further means of keeping a credit card account secure, you should keep all receipts until the end of the month. Then, check them off against the monthly statement, and then either file them away safely or shred them.

    Afraid of credit card fraud? Check statements, then shred them- Cashfloat Afraid of credit card fraud? Check statements, then shred them- Cashfloat

  11. Keep your PIN Number Safe
  12. The PIN (Personal Identification Number) for your card will usually arrive in a separate postal envelope to your card when you receive it. This is one of the security measures that card companies take. You will also receive advice that you should always keep your card and PIN number separate.

    Ideally, you should memorise the PIN and destroy the paper it came on, but if you find this too difficult, the two items should still be kept separate. That is, keep the PIN and card in separate wallets or pockets so that if the card is stolen or lost no one else will be able to make cash withdrawals from the account.

    Never give your PIN number to anyone else, and this includes close family and friends. When using a card online, you should never be asked for your PIN, so if this happens, it should set off alarm bells. The PIN is only required at an ATM or when making a purchase with a card reader.

  13. Lost Or Stolen Cards
  14. It goes without saying that you should immediately report any card that is lost or stolen. This is when good planning comes into play. Keep a record of all card accounts you have and the emergency number to call for them. This will allow you to report the problem and get the card cancelled if you lose it.

    When you lose a credit card, speed is of the essence. After you have reported a card as missing, any fraudulent transactions are the responsibility of the card company and you will be able to reclaim any money that you have lost.

  15. Keep your Personal Details Up To Date
  16. When you move to a new address, always make sure that your bank or card company is informed immediately. Any statements or other information which go to a former address are in danger of falling into the wrong hands.

    Consider using the mail redirection service so that you can be sure that all mail comes to your new address when you move. This will prevent you losing mail from any senders that you have forgotten about.

  17. Watch Out for Email Scams
  18. We all use email, and while most will be rightly suspicious when we receive an email to say that we have won the lottery in a far flung corner of the earth and that we need to give our credit card details in order to claim it, many financial frauds are still conducted through email. While many frauds are easy to spot, many are not. Always consider the possibility that emails you receive could be fraudulent.

    Report suspicious emails to Cashfloat Report suspicious emails to Cashfloat

    Therefore, to stay safe, do not answer any email that asks for your card details or any other personal information that could result in the theft of your identity or funds. Banks and other companies frequently send out messages advising customers that they will never ask for account details by email so if you do receive one of these requests it is highly likely to be a scam designed to gain access to your account details. As with phone scams, only make payments or give out your card details after you have confirmed the identity of the company who is trying to contact you and after you have contacted them yourself through the correct channel.

  19. Stay Alert to SMS Alerts
  20. One of the advantages of new technology is the way in which it assists both the customer and the banks to help secure accounts against credit card fraud. Most card companies now have an alert system available that can be activated should there be unusual activity on an account. This might be multiple cash withdrawals or multiple purchases made in unusual locations. If you receive an SMS from your credit card company alerting you that a fraud may have been committed on your account make sure that you answer it immediately.

Report a card theft immediately- Cashfloat Report a card theft immediately- Cashfloat

Summary: Credit Card Fraud

Hopefully, having read this article you will be more aware of the dangers of credit card fraud. Fraud is a risk that all credit card owners need to be aware of and to take steps to avoid. Knowing even the basics of credit card security can save you a great deal of money and stress.

If you have been a victim of credit card fraud look at the Money Helper website on what to do about it.

The next chapter in this series by Cashfloat looks at how to deal effectively with credit card debt.

To read about loan management software for financial companies, click here.

Cashfloat - credit card fraud
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About The Author
Erin Redfern
Erin, a native Londoner, combines her love for the city with her passion for writing. With a first-class degree in Mathematics, Elizabeth chose to pursue a career aligned with her real passion—writing.
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