Credit cards have been around since the 1920s. It wasn’t until the 1950s, however, that the Bank of America launched the first modern credit card.
Nowadays, they’ve become a ubiquitous part of our consumer culture. Not only are they great for building credit, but some may also provide you with rewards. For example, many credit cards offer cashback.
As great as they may be, however, they do have some cons. For one thing, it’s easy to overspend. Fraud is also a thing—that is, individuals can easily steal your number to make purchases.
Want to learn more about how that works? If so, you’re on the right page. We’ll be going over some of the most common types of credit card fraud below.
Keep reading to learn more!
What Is Credit Card Fraud?
Credit card fraud is when somebody uses your credit card information to make unauthorized purchases in your name. They may also take out cash advances using your account.
Fortunately, there are security systems in place to prevent and detect credit card fraud. For example, many banks are capable of detecting unusual activity in a customer’s account.
Visit Bonsai Finance for some tips on what you should do if you are a victim of credit card fraud.
4 Types of Credit Card Fraud That You Should Know About
There’s more than one type of credit card scam. Here’s what you need to know.
1. Stolen Credit Card Fraud
This type of fraud happens when someone steals your credit card and uses it as if it’s their own. More often than not, they’ll use it to purchase items over the internet.
In some cases, they’ll also use it in stores. After all, not all merchants ask for photo identification.
2. Credit Card Skimming
Credit card skimming is a type of fraud in which thieves steal your card information to make unauthorized purchases. They do this by using “skimmers”—card readers that are capable of harvesting data when you’re performing a legitimate transaction.
This can happen at ATMs, restaurants, gas pumps, even during online transactions.
3. Credit Card Application Fraud
This type of fraud occurs when someone tries to open a credit card in your name. They can do this by stealing documents such as utility bills, bank statements, and pre-approved credit card applications.
In some cases, they may even steal supporting documents to substantiate their application.
4. Card-not-present Fraud
Card-not-present fraud is a type of scam in which the fraudster does not have a physical credit card. Instead, they’ll obtain details such as your credit card number, account holder’s name, and expiration date.
In doing so, they’ll be able to commit fraudulent activity online, by mail, or via the phone.
Understanding Credit Card Fraud
And there we have it—four types of credit card fraud. The bottom line is, there’s more than one way that criminals can use your credit card information.
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