Rob Berger

According to the US Department of Homeland Security, credit card fraud costs Americans over $500 million annually. Despite concerns over terrorism, health care, and the environment, credit and debit card fraud ranks as the number one fear of Americans. Individual consumers, merchants and credit card companies are all at risk.  As technology advances, the public will continue to face mounting challenges to prevent and detect credit card scams.

Below are 5 common credit card scams that you need to look out for to avoid having your identity stolen.  The second you become aware of a credit card being used without your knowledge, you need to call your credit card company and have the card canceled.  

Lost and Stolen Credit Cards

The oldest form of credit card fraud is lost and stolen credit cards. This form of credit card fraud requires no investment in technology. Professional criminals and pickpockets prey upon innocent civilians who have accidentally lost their credit card(s) or taken their attention off their belongings. Unfortunately, there is no real solution to this problem. The only recourse is to stop the credit card through your credit card issuer. If detected early enough, one might be able to stop the damage; however, if left unchecked, the culprit could rack up substantial charges.

Card Not Present Orders

Card Not Present Orders or CNP is a type of credit card scam that occurs when the physical card is not required or visible for the order nor is the consumer’s signature on a sales draft required. CNP scams usually take place via the Internet, over the phone or through the mail. Criminals use stolen cards to place fraudulent orders. Because there are no security guards or cameras present as there would be in a store, criminals are less likely to be caught. Unlike a lost or stolen credit card, which may penalize the consumer who had their card lost or stolen, a CNP scam affects the consumer and the merchant. In all likelihood, once the consumer realizes that they have been scammed, he or she will protest the charge and the merchant will have to process a refund. It is difficult to immediately recognize when such a scam has been carried out, and therefore, takes longer to be reported and is less likely to be investigated.

Application Fraud

Application fraud is another common credit card scam and can be divided into two types: the first and most widely known is “identity theft.” In this case, a criminal assumes someone else’s name and credentials to fill out a credit card application unbeknownst to the victim. Often times, an individual uses a false name with a temporary address or steals supporting documents from the victim to substantiate the application. In recent years, banks have “tightened” the application procedure and require account references, a birth certificate, driver’s license and/or passport. However, if and when an identity thief is approved for a card in the victim’s name, thieves have free reign to inflict monetary and emotional harm including damaging the victim’s credit score and payment history.

The second type of application fraud is financial fraud. This type of fraud entails providing false information when applying for a credit card perhaps to gain more credit than the perpetrator is entitled to. Often times, the fraudster will exaggerate income. Although banks attempt to put up safeguards, fraudsters have successfully gotten around such measures.

Phishing

One of the more modern credit card scams is known as “phishing.” In this scenario, Internet hackers lure their victims to an official looking website claiming to be the victim’s bank, credit card company, or payment processor such as PayPal. The fake website looks as close to being legitimate as possible and includes logos, URLs and slogans. Victims are then asked to provide their bank and credit card information as part of a “routine security check,” yet in reality, the consumer’s information is being stolen. Once the unknowing victim “submits” his/her credit card information, it is immediately transmitted to those running the scam.

Skimming

Today, skimming is becoming the most popular method of credit card fraud and the most difficult to prevent. Most often, skimming is an “inside” job and usually involves a dishonest employee that interferes in legitimate transactions. Employees or cashiers can carry pocket skimming devices (as pictured below), battery-operated electronic magnetic stripe readers, and use this technology to swipe the customer’s card to obtain their credit card details.  During this time, the unknowing customer is waiting for the card terminal to validate their transaction. Once the clerk has the consumer’s credit card information, he/she is free to go on a spending spree. Skimming is not only difficult to detect but hard to prevent, as the last person a defrauded customer suspects is the store clerk. Further, advances in skimming technology have made it easier to copy the data of those cards that claim to be completely secure.

The Internet has made applying for a credit card quick and easy. Not only has the Internet made online applications a reality, but it also has made finding, reviewing and comparing credit card offers a snap.

While it may at first seem complicated to apply online for a card, it’s really simple. We’ll walk you through the process here, which only takes a couple of minutes. An online credit card application involves just three steps:

1. Compare, review and pick the card you want
2. Visit the card’s secure online application page
3. Fill out the online form to submit your application

Let’s take a look at each of these steps.

Step 1: Compare, review and pick the card you want

The first step is to choose a credit card. We’ve made that task easier by organizing credit card offers by category. In the left sidebar you’ll see five primary categories of credit cards: (1) low interest rate cards, (2) rewards cards, (3) cards by credit history, (4) cards by type, and (5) cards by issuer. These card offers include credit cards from major issuers such as Citi, Discover, Chase, and American Express.

On each page you’ll find the information you need to choose a credit card. This information includes the card’s interest rate, any 0% introductory offers, and details on any rewards offered by the card. Once you’ve chosen a card, it’s time to move to step two.

Step 2: Visit the card’s secure online application page

With each credit card offer you’ll find here at Credit Card Offers IQ, you’ll see a green or orange apply button. Pressing this button will take you to that card’s official online application page. It’s important to note that you’ll never be asked for confidential information here at Credit Card Offers IQ. All of your application information will be provided directly to the credit card company on their secure website.

Step 3: Fill out the online form to submit your application

Once you’ve chosen the card you want and gone to the card’s online application, it’s a snap to apply online for the card. By federal law, credit card companies must collect certain basic, identifying information. This information includes your name, address, date of birth, and social security number. You will also be asked about your occupation and income, and whether you have any bank accounts.

If you are applying for a card with a 0% balance transfer option, you may also be asked about the balances you wish to transfer. And if you want to add other authorized users, you will be asked for their name.

Once you’ve submitted your application, you should receive a confirmation e-mail from the credit card company stating that your application has been received. For some cards, you can actually get the results of your application in about 60 seconds. Instant approval cards, such as those from Discover or American Express, make applying for a new credit card quick and easy.

Some benefits of using a credit card are obvious. For example, some use credit cards to take advantage of 0% offers, cash back rewards, or miles. But there are some additional perks to using a credit card that aren’t as well known. One of those perks is purchase protection
Purchase protection offers you additional assurance that the product you are about to buy is protected from certain types of losses. Whiles these protections vary from one credit card to another, purchase protections usually come in three flavors:

• Protection for purchases
• Warranty extensions
• Protection for returned items

Let’s take a look at each of these benefts.

Protection for Purchases

Protection for purchases cover merchandise that has been damaged or found to be defective. In some cases, the protection also covers you if the item you purchased becomes available for less than you paid. These protections usually lasts 90 days from the date of purchase. Depending on the card, there may be a minimum monetary requirement to qualify for a refund.

Examples from several popular credit cards:

American Express

• Embedded Protection: Use your Card and Purchase Protection protects eligible purchases against accidental damage or theft for up to 90 days from the date of purchase.
• Worldwide Coverage: Coverage includes eligible purchases made worldwide with the Card, including gifts purchased for others.
• Shop Worry Free: Purchase Protection repairs, replaces or reimburses you for up to the amount charged to the Card.

Citi Diamond Preferred Card

• Price Protection: If you buy something with your Citi card and then see it advertised in print for less within 60 days, you will receive a refund for the difference up to $250.
• Retail Purchase Protection: Most items purchased with your card are eligible for protection against accidental damage or theft for up to 90 days from the date of purchase.

Warranty Extensions

Many credit cards extend the terms of any original manufacturer’s warranty, which is typically an additional year added to the warranty. Some credit card companies, however, will not extend the warranty if you haven’t registered your product.

Examples from several popular credit cards:

MasterCard

• Extended Warranty: Doubles the original manufacturer’s or store brand warranty for up to one year when you pay with your eligible MasterCard card.
• Satisfaction Guarantee: If you become dissatisfied with a product you purchase using your eligible MasterCard card within 60 days of purchase, and the store will not accept a return, you may be eligible for a refund for the cost of the product up to $250.

American Express

• Embedded Protection: Charge your covered purchases that have a valid U.S. manufacturer’s warranty of 5 years or less to the Card.
• Extend Your Warranty: Charge your covered purchases that have a valid U.S. manufacturer’s warranty of 5 years or less to the Card.

Protection for Returned Items

These features guarantee customer satisfaction on covered items charged to a card. If a card holder tries to return an item and the manufacturer or vendor won’t take it back within the allotted time, the card holder will receive a refund from the credit card issuer.

Examples from several popular credit cards:

American Express:

• 90 days of Protection: If you try to return an eligible item purchased in the U.S. within 90 days from the date of purchase and the merchant won’t take it back, American Express will refund the purchase price.
• Up to $300 Coverage: You are covered for up to $300 per item, excluding shipping and handling, up to $1,000 annually per Card account.

MasterCard

• Satisfaction Guarantee: If you become dissatisfied with a product you purchase using your eligible MasterCard card within 60 days of purchase, and the store will not accept a return, you may be eligible for a refund for the cost of the product up to $250