Ready for some scary news? In the past five years, 30 percent of all cardholders – credit, debit, even prepaid – have experienced some form of fraud, and at least 17 percent have experienced multiple fraud attempts. However, there’s also good news. Armed with an understanding of how credit card fraud happens and how to guard against it, you can significantly reduce your exposure to risk. Ready to find out how? We’re here to help!
The Shift to EMV Chips
You may have noticed in recent years that most credit and debit cards come embedded with small chips. A card chip, known as a Europay Mastercard Visa (EMV) chip, uses the global EMV standard to authenticate and secure transactions made by credit, debit and prepaid cards. This technology is more secure than traditional magnetic stripe cards, which store data that is unchanging and easily copied by a card skimmer. Once a fraudster has “skimmed” your magnetic stripe data, they have all the information they need to use your card as they see fit. Chip cards, by contrast, generate unique security codes for each new transaction. This means thieves can’t use your card for new transactions even if they manage to copy your data.
Unfortunately, card skimming is only one kind of risk. Chipped cards do nothing to protect against card-not-present transactions, such as those processed online. These cards also come with other potential security risks; each card still has a magnetic stripe backup, and this stripe data can be rewritten to effectively undo the protections afforded by the security chip. Data breaches are still a major concern as well, as chip technology offers no protection against the theft of stored information. Additionally, EMV cards can still be skimmed and their data sent remotely to a secondary device, allowing criminals to use the card as they wish for a short period of time.
Tread Carefully With P2P Transactions
Whether it’s Venmo, PayPal, Square Cash or another service entirely, a peer-to-peer (P2P) transaction platform allows you to quickly and conveniently send and receive cash from virtually any device. Unfortunately, P2P services also expose your credit card information to a greater risk. To limit your chance, only conduct transactions with people you know and trust. Additionally, carefully read the platform’s security policies before using to ensure that the process protected appropriately.
Use a Dedicated Card for Digital Transactions
There are clear benefits to using a single credit card for all your needs: it allows you to manage your spending easily and even rack up reward points. However, you can improve your security by using a separate card only for digital transactions. While it won’t prevent theft, it will limit your exposure by ensuring that only one account is potentially put at risk.
Don’t Get Hooked by Phishing Scams
Phishing is a very simple type of scam, but it’s also extremely effective. A phishing attempt comes in the form of an email, text message or social media communication that purports to be from a trusted source, often a reputable company or financial institution. The message will include a request for login credentials, personal information or other sensitive data that criminals can use for fraudulent purposes, or it will attempt to infect your device with malware. To prevent falling victim to phishing, never enter personal information after following a link you’ve received in an email or message. If you believe the request may be legitimate, contact the company or person directly to verify before providing any information.
Practice Good Security Habits
It may be convenient to store your credit card data and other information in online shopping accounts that you frequent, but it’s also a major security risk. Instead, opt out of any data storage, and enter your information manually for each transaction. Clear your browser’s cache after making a transaction to ensure that none of your data is stored, and be sure to only shop over a secure https:// connection. Treat all public computers and Wi-Fi hotspots as compromised, even if they appear to be safe.
The unfortunate reality is that you can never completely prevent fraud, but you can identify it quickly and limit the damage. To that end, make a habit of reviewing your credit card and bank statements frequently for any suspicious activity. It’s also important to check your credit score and credit report for any errors or signs of fraud. Many credit cards now provide free access to your credit score, and you can check your credit report three times per year by alternately requesting a report from each of the three major reporting bureaus: Experian, TransUnion and Equifax.
Stay Safe With Text Alerts
In addition to obtaining your credit reports, you can stay on top of your finances by using text alerts. Most banking apps provide the option to set various alerts, whether it’s a text message for every transaction over a specified dollar amount or a daily text summary of your current balance. Set these alerts and use them to keep an eye out for any signs of unusual activity. If you notice something that doesn’t add up, report it as quickly as you can.
Credit card fraud is a serious and rapidly growing problem, with losses estimated to reach $10 billion by 2020 in the United States alone. The introduction of EMV chips has helped to curb certain types of fraud, but it’s done nothing to prevent fraud online. With the knowledge and these tips, however, you can do what it takes to keep yourself and your finances protected.
About the Author
Beth Kotz is a contributing writer to Credit.com; she specializes in covering financial advice for female entrepreneurs, college students and recent graduates. She earned a B.A. in communications and media from DePaul University in Chicago, where she continues to live and work.