What is credit card fraud?

With more of our finances being managed online than ever before, it’s understandable to wonder how secure your data really is – and what the potential risks are.

While credit card fraud is a topic you’re likely aware of, you may not know the ins and outs of it. Learning what credit card fraud is, how it happens, and what to do if it affects you can go a long way towards protecting your credit health.

And with the right tools in place, spotting potential issues early can be a lot easier.

What is credit card fraud?

Credit card fraud happens when someone uses your credit card details without your permission to make purchases, withdraw money, or take out credit in your name. It can involve your physical card, your card details, or even your identity being used behind the scenes.

Sometimes fraud can seem obvious – like spotting a transaction you don’t recognise on your statement. Other times, it’s much more subtle and can go unnoticed for months if you’re not actively keeping an eye on your finances.

Credit card fraud comes in many forms, each with its own tactics. Here are five of the most common types of credit card fraud:

1. Credit card theft

Credit card theft involves someone physically stealing your card and using it without your permission.

Another method is ‘shoulder surfing’, where someone watches you enter your PIN at a shop or cash point, then steals your card or phone.

2. Credit card skimming

Skimming occurs when a device, called a skimmer, is placed over a card reader at cash machines or petrol stations.

These devices capture your credit card information when you swipe it, allowing thieves to create a duplicate card. Although technological advances like chip and pin have made skimming less common, it can still happen.

3. Stolen credit card details

This type of fraud doesn’t require a physical credit card. That’s why it’s also known as ‘card-not-present fraud’.

Thieves obtain your card details – such as the credit card number, expiry date, and security code – through online scams or hacking.

Fraudsters might send phishing emails looking like they’re from a reputable company, asking for your card information. Once they have your details, they can make online or phone purchases without the card.

4. Fraudulent credit card applications

This sees fraudsters use your personal information to apply for new credit. They might gather personal data and contact information from a company security breach or social engineering attacks – like phone, email, or social media phishing.

Once they have enough details, they submit a credit card application. And if approved, fraudsters can open a new account and rack up charges on a card you didn’t know existed.

5. Credit account takeovers

In an account takeover, a criminal uses your personal information to gain control of your existing credit card account.

They might change your address, PIN and passwords, effectively locking you out of your account. This could happen if someone hacks your email or accesses your personal details through data breaches or other means.

Signs you might be a victim of credit card fraud

Remember, being a victim of fraud doesn’t mean you’ve done anything wrong and it’s not something to feel embarrassed about. Even people who are careful and tech-savvy can be caught out.

Some warning signs are more obvious than others. Look out for:

• Transactions you don’t recognise on your credit card statement.

• Hard searches on your credit report. These indicate a credit application has been made with your details.

• Letters or emails about accounts you don’t remember opening.

• Changes to your credit limit or contact details you didn’t request.

Keep in mind that fraud can leave fingerprints on your credit report long before you notice money leaving your account. This is why regularly monitoring your file is key.

At Checkmyfile, we provide the most detailed credit report you can get. It has all your information from Experian, Equifax, and TransUnion in one place. And if you spot something that doesn’t look right, our UK-based customer care team can help.

Get started with a 7-day free trial. It’s then £14.99 a month – cancel online anytime.

How to report credit card fraud and what to do next

If you think you’re a victim of credit card fraud, don’t panic. There are practical steps you can take to help put things right.

1. Contact your card provider

Let them know what’s happened so they can freeze your card, stop further transactions, and issue a replacement if needed.

2. Check your recent statements

Look back over your transactions carefully to identify anything else that seems unfamiliar. The more information you can provide, the easier it is for your lender to investigate.

3. Change your passwords

Update passwords for your credit card account, email, and any other financial apps – especially if you think your details may have been compromised online.

4. Report the fraud

In the UK, you can report fraud to Report Fraud, the national fraud reporting centre. This helps authorities track patterns and prevent further scams.

5. Monitor your credit report

This is a crucial step. Fraud could lead to new accounts or missed payments appearing on your credit report.

How to prevent credit card fraud

While you may not be able to guarantee you’ll avoid credit card fraud, there are steps you can take to reduce the risk.

1) Keep your cards secure

Never leave your credit cards unattended when you’re out and about. At home, store your cards in a secure location. And when making card payments in person, always keep your card in view to make sure it isn’t tampered with.

2) Stay vigilant online

Watch out for websites trying to steal account information. Always check for a secure “https://” connection when shopping online. Double-check independent reviews (on websites like Trustpilot) before making payments. For any financial institutions, check the FCA Financial Services Register to confirm you’re dealing with reputable businesses.

3) Treat unexpected contacts with caution

As a general rule, ignore unsolicited phone calls, emails, or people knocking on your door requesting personal information. Legitimate organisations rarely ask for details this way, so it could be fraud. If you’re unsure, hang up or stop talking, and research a company’s contact details yourself. Then get in touch directly.

4) Protect your personal information

Never give out your PIN or passwords and avoid sharing sensitive information over the phone or email. Personal information can be used to access your accounts or apply for credit in your name.

5) Dispose of cards and documents securely

Cut up old cards through the chip and magnetic strip and shred documents with personal information before throwing them away. This helps stop thieves using your discarded information for fraud.

6) Keep your software up to date

Regularly update your computer and phone software to protect your devices. Hackers can more easily exploit vulnerabilities in outdated software.

7) Use strong, unique passwords

Create strong passwords for different accounts and change them regularly. Avoid using the same password across multiple accounts to reduce risks if one is compromised.

How credit card fraud can affect your credit health

Even when you’re not at fault, fraud can still affect your credit health if it’s not addressed. For example:

• A fraudulently opened credit card may appear on your report.

• Missed payments on accounts you didn’t open could be recorded.

• Your overall debt level may look higher than it should.

These things could lower your credit score. That’s why keeping an eye on your credit report is important for keeping things in check.

Staying one step ahead

While no one can guarantee they’ll never be affected by credit card fraud, staying informed, alert, and proactive can help.

Checking your statements, being cautious online, and keeping an eye on your credit report all work together to help protect your finances – and your future borrowing options.

And if you ever do spot something that doesn’t look right, remember you’re not alone and support is available. Get absolute clarity with your most detailed credit report today.