Credit card fraud and how to protect yourself
CREDIT card fraud currently costs the UK economy a staggering £88 million a year. What can you do to protect yourself?
There are so many anti card fraud initiatives now - from Government backed Chip & PIN technology to fraud and identity theft monitoring - that it can seem like credit card security has been taken out of our hands.
As we'll see, credit card providers do work hard behind the scenes to keep our cash safe but security is still key where credit cards are concerned and knowing the basics to protect yourself is a must.
Types of credit card fraud
According to the National Police Chief's Council there were 1.9 million cases of fraud reported on UK issued cards in 2016, which is an increase of 39% on the previous year.
Fraud generally targets the unsuspecting and plays heavily on deception so knowing what to look out for is often the first step towards keeping safe.
Fraudsters operate in a variety of ways. They may:
- Physically steal a card or use one they have found. The damage that can be inflicted by this has only increased since contactless card payments became widespread.
- Clone cards - known as "skimming" - when seemingly processing a legitimate transaction.
- Steal details from credit card transactions - the largest single type of fraud in the UK - over the internet, by telephone, fax and mail order.
- Intercept cards sent by lenders before they reach customers' addresses.
- Steal identities by opening new accounts in another person's name without their knowledge or permission using proof of ID they either find or steal (this is why you should cross cut when shredding documents and unwanted credit card applications sent in the post before throwing them away).
- Take over an existing account and pretend to the lender that they are you before arranging payments from your balance - or even change addresses to have new cards and cheque books delivered elsewhere.
- Watch you input your PIN number at an ATM before stealing the card.
- Use a device fitted over an ATM slot to skim details of the card and a camera set up to simultaneously record you entering your PIN number.
- Attempt to lure unsuspecting cardholders out of cash by pretending to offer legitimate services and requesting payment by card upfront. Often these play on topical events such as recently uncovered legal loopholes, one example of this is debt wiping scams.
Credit card providers have a responsibility under the Lending Code to reimburse victims of fraud when the cardholder wasn't at fault.
The onus is on the provider to prove fault on the part of the cardholder but, still, that means that taking sensible precautions against credit card fraud is the best way to ensure that the money is reimbursed as soon as possible.
The most important point is this: never, EVER write down your PIN number and never, ever, ever write it on the card, on a piece of paper in your purse or on your phone so that you have it out and about.
Doing the above is one of the only ways that you won't get reimbursed after fraud and is so important that we've written a full guide to PIN fraud on the subject.
We've also covered in more detail consumer rights when fraud happens here.
However, being a victim of fraud is never fun so take the following precautions too:
- Hide your PIN number when paying or at the ATM.
- Look out for unusual activity/people loitering at cash points.
- If you shop online make sure your virus protection software is running and up-to-date and that your wireless connection is secure.
- Try and stick to online shops you know and trust - and always check the security certificate (padlock) is up to date and correct for the web address you are visiting.
- Use Paypal as a way to keep your credit card details safe - however, balance the fact that paying with Paypal will waive any Section 75 purchase protection.
- Your bank won't ask for personal details in an email so never give them away.
- Try not to let anyone walk away with your card while you're paying.
- Check your statements - the sooner you report anything suspect the easier it will be to claim back any losses.
- Crosscut (this is important as single cuts aren't as secure) shred any documents, such as bills, as well as unwanted credit card applications sent to you in the post before throwing them away.
- Be careful when using online banking as well as applying for credit cards online (more on this here) - make sure your wireless connection is encrypted and you check the security certificate (padlock) of the bank's website is valid (more here).
How your credit card provider protects you
All credit cards offer some basic level of security against fraud: they all come with chip and PIN and they'll all monitor your account for activity that looks like credit card fraud to some extent.
But some credit cards are better equipped to keep your money safe than others.
Here are some of the main terms for credit card security services to look out for:
Fraud monitoring / Active fraud protection
Credit card companies monitor the use of your credit card - usually looking for Internet use/card not present (CNP) usage and foreign transactions. If anything seems suspect, it is standard procedure for card companies to phone and discuss anything they deem suspicious with you.
Who offers it? Everyone!
Online fraud guarantee / protection
Guarantees you against any fraudulent use of your credit card made online without your knowledge or consent. If it does happen, simply phone your credit card issuer as soon as you know about it and they won't hold you liable for the cost - refunding any money back to your account.
This is a double protection since providers have to do this anyway but some consumers (e.g. those with RBS credit cards) should note that the provider doesn't consider them covered unless they're using 3D secure. See below for more on that.
Who offers it? Almost everyone. Vanquis seems to be a notable exception.
Visa and Mastercard offer this extra online protection service which is often rebranded with the provider's name. Halifax call it 'Halifax Secure', for example.
3D stands for 'Three Domains Secure' (meaning: the merchant, the acquiring bank and Mastercard or Visa) and, in fact, it means entering an extra password when paying online.
Some card providers make paying by 3DS a condition of their online protection guarantee but this is nit picking since 3DS should be mandatory in any case.
Who offers it? Almost everyone. American Express cards offer the same protection via SafeKey.
Identity theft services
Identity fraud happens when a fraudster uses your personal information to open a financial agreement like a credit card.
Credit card providers offering identity theft services usually provide a dedicated helpline for victims and those concerned. Not to be confused with ID theft insurance, covered here, which you'd need to pay for.
Who offers it? Identity theft protection should now come automatically with all cards, including those offered by the likes of Barclaycard, Capital One and Halifax. But some like Aqua offer a more comprehensive protection service that includes a free credit report, we explain how this can be useful below.
Credit report access
At the end of the day, only you know which products you've applied for so access to a credit report is one of the best ways to protect against identity and application fraud.
If your credit card provider doesn't offer it as standard you can still get a free credit report online - click through to see our full guide on this.
Who offers it? Aqua as mentioned above. Also existing Capital One customers may already have this service although they no longer offer it on new cards.
Protection on purchases
Not protection against fraud as such but it will hold the credit card company equally liable under law if a supplier goes bust, doesn't deliver what you've paid for or supplies a faulty or damaged item.
This protection, known as section 75, covers purchases made with a credit or store card that cost between £100 and £30,000. See our full guide to Section 75 for more on this, available here.
Who offers it? Everyone offers section 75! Some card providers also offer additional forms of protection such as purchase protection insurance, more on that here.