Disclaimer: Keep in mind that all banks and credit card companies have different policies and regulations. Please contact your bank representative or credit card company for more information about their fraud protection program.
I previously worked as an analyst for a large financial services company, and my job was to go through hundreds of fraud cases a day and move the paperwork along to be processed by the credit card company. As a result, I learned a lot about credit card fraud and the misconceptions that come with it. Below are five facts about credit card fraud that you might not know.
(If you decide to turn this article into a drinking game (i.e. taking a drink every time you see the word “fraud” or “fraudulent”), please do so at your own risk.)
1. “Fraud” doesn’t mean what you think it means.
Most people assume any unauthorized charge on their card is fraudulent. But there are countless transactions that can pop up on your statement that are not technically considered fraud, even if you didn’t explicitly okay them. For example, let’s say you signed up for a free trial. Most companies have it in the fine print that once the free trial is over, your card will automatically be charged regularly. It doesn’t matter if you knew about the fine print. If you willingly gave your credit card information to the company for a free trial, the later charges are not considered “fraudulent.” Other examples that aren’t considered fraud include being charged more for a service than agreed upon (common when renting a car), or if a merchant charged you twice for one transaction.
In the paperwork for these cases, people love to indignantly write in all caps, “THIS IS FRAUD.” But, depending on your credit card and bank rules, it technically isn’t. You’ll most likely still be able to get your money back, but the paperwork might need to be filed differently, as this is no longer a “fraud” case.
2. You’ll most likely always get your money back.
This depends on what bank you use, but if you file a dispute, most banks will ensure that you didn’t authorize the transaction, refund you the money, and then turn around and dispute it with the credit card company and merchant so they can get refunded as well. So if random, unauthorized charges pop up on your statement, don’t worry yet. Your bank might be able to help get that money back and waive any overcharge fees that result from it.
3. But your bank reps might not always know what they’re doing.
Let’s go back to the “free trial” example. The bank representative might assume an example like this is fraudulent, so they will file the paperwork accordingly, only asking you a few questions before sending it to a company like the one I worked for. But non-fraudulent cases usually need to be filed as something else, like a cancellation dispute or a duplicate charge. In those cases, more information is needed by you, the customer, in order to accurately process this. I can’t tell you how many disputes I had to postpone and request more information multiple times to get to the bottom of things. Because the bank rep didn’t know to properly file the paperwork, the process would take much longer to complete.
I’m not saying banks are incompetent or unable to protect you. Banks lose a lot of money because of fraudulent transactions, so they really try to prevent credit card fraud without limiting the spending habits of its customers. Ever get a random call from your bank about a huge and random purchase you made just to make sure you’re actually the one that made it? Banks have certain thresholds that alert them to potential fraud so that they can cut it off before the transaction goes through if it is indeed fraudulent. And they use advanced analytics and trend analysis to nip fraud in the bud before it even happens.
4. You only have so much time to get your money back.
Every bank and credit card company is going to have different rules for this, but the sooner you speak up about an incorrect transaction on your credit card statement, the better. If you don’t notice a fraudulent transaction until six months later, chances are it’s too late to dispute it. Depending on the type of incorrect transaction, you might only have 60 days to submit a dispute.
5. The credit card chip won’t completely get rid of fraud.
So much time, research, and money went into creating that chip in your credit card (the reason the machine will beep loudly at you to remove your card at the store.) They were created to try and mitigate how easily scammers can steal and use your credit card information. But unfortunately, people will always find a way to steal credit card information, and they will eventually find a way to surpass the technology’s protection. It’s actually an incredibly lucrative business. So while the chip has done a lot to mitigate fraud, it won’t get rid of it 100%
Now, here are some tips on how to better protect yourself against unwanted transactions in the future.
1. Be careful with “free trials.” Nothing is free, my friend. Unless you trust yourself enough to remember to cancel before the trial period ends, just avoid them altogether.
2. Check your statements regularly. Dispute incorrect transactions ASAP so the time window doesn’t pass. Regularly double check that you weren’t overcharged or charged twice for anything.
3. Keep car rental receipts. It’s not uncommon to be charged more than you originally bargained for when renting a car. Having a receipt with a list of all fees will improve your case if you feel you were overcharged.
4. Cancel a card if it’s missing, has been stolen or if fraudulent charges start popping up. Report signs of fraudulent transactions to your bank immediately, because the bank might be able to stop the transaction before it goes through.
5. Be more mindful of card readers you use at gas stations. Skimmers (attachments to card readers that are programmed to steal credit card information) are more likely to be at pumps that are farthest from the cashier. Also, beware of gas pumps with two different card readers.
6. Limit who has access to your card. Does your PlayStation, smartphone, tablet or other electronic have your credit card information auto-saved? Does someone else have access to that electronic, like your kid or elderly family member? If the answer to those two questions is “Yes,” undo the auto-save feature and manually type in credit card information when making a purchase.
Disputing charges is stressful and time-consuming. And with advances in technology, it’s easier than ever to have your credit card information stolen without knowing. It’s very important to know both your rights as a consumer and how to best protect yourself. So check your statements regularly and be careful out there!