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Credit Card Fraud

Credit Card Fraud

Credit card fraud is a form of financial fraud which is a common occurrence in today's world. In the United States, there is an estimated $1 billion dollars lost to various credit card fraud practices every year. Because of this, it is important for individuals to be aware of ways to prevent or report lost or stolen credit cards. Credit card theft occurs when a person steals another person's credit card or credit card information in attempts to use that person's credit without authorization. Credit card theft has grown in recent decades and often costs businesses and consumers very large amounts of money each year. The crime is often categorized in the white collar crimes in state criminal statutes.

Punishment for Credit Card Theft

Credit card theft is often characterized as either a misdemeanor or a felony for more serious theft cases. The crime is punishable by a jail or prison sentence, which often depends on how much was stolen. Also, the defendant may sometimes be required to pay criminal restitution in order to reimburse the victim for losses caused by the theft.

How is Credit Card Theft Accomplished?

Credit card theft is somewhat unique in that the actual, physical card often does not need to be stolen in order to accomplish the crime. Instead, the thief often gets a hold of information such as an individual's:

  • Credit card account number;
  • Password; and
  • Personal information, including:
    • address;
    • date of birth;
    • social security number; and
    • other personal information.

This may be accomplished by a number of means which are associated with identity theft crimes, including:

  • Hacking into an individual's computer or online accounts to retrieve information;
  • Perpetrating scams or fraud schemes aimed at obtaining the individual's information;
  • Theft of other physical items that contain the individual's data, such as a wallet or purse; and
  • Capitalizing on the individual's stress or worries regarding heavy credit card debt.

Stealing a person's physical credit card is often useless unless the thief also gets a hold of the personal information as well. Therefore it's important that a person protects their personal and confidential information carefully, in addition to keeping their cards in a safe place. By being aware of how credit card thieves operate, it is possible to reduce the risk of such thefts from happening.

By having knowledge regarding how credit card thieves operate, it may be possible to reduce the risks of these types of thefts from occurring.

Credit Card Scanner Crimes

Many stores and businesses allow the customer to swipe or scan a credit card to make a purchase. This usually involves a machine, which may or may not be under the supervision of a store employee. An example of this is at a gas station, where the credit or debit card scanning devices are mounted on or near the gas pump.

Credit card scanner crimes therefore involve the manipulation of credit card scanning devices in order to access the victim's credit card information and/or bank account data. This is a relatively recent phenomenon but has already led to much loss for businesses and customers alike.

How Does It Work?

Credit card scanner crimes can be accomplished in a number of ways, including:

  • Recalculation of devices so the information is routed to a different source and recorded
  • Tampering with the actual “swiping” area so that the information is distorted or the magnetic portion of the card is erased/copied; many of these methods are linked to larger credit card fraud schemes
  • Manipulation by employees who are swiping the card on behalf of the customer
  • Installation of unauthorized hidden cameras to record information from the victim

One way to detect credit card scanner crimes has to do with employee actions. If you notice that an employee is taking too long with your card, or is swiping the card multiple cards, they may be stealing your information. You can check with your credit card company for suspicious activity in your bank or credit account.

Also, note that some credit cards also function as debit cards. Therefore, credit card theft can also affect one's debit account, which may contain their savings. Penalties for credit card theft is often governed by a state's white collar crime laws. The consequences may include fines and jail sentences.

Secured Credit Card Marketing Scam

You may have encountered advertisements offering credit cards for those with bad credit or no credit. No matter your current credit circumstance, you are told to call a number to receive your very own credit card. However, you should be aware that such ads may only be trying to tempt you into calling with no real credit card offers available.

Secured Credit Card

A secured credit card, just like an unsecured one, is used to pay for goods and services. Unlike an unsecured credit card, you must have a savings account as security under a secured card. If you do not, you will not be extended a line of credit. Other requirements for a secured card may include:

  • There may be a required savings deposit (ranging from a few hundred to a few thousand dollars)
  • Interest on your deposit will be paid by a bank
  • You may have to pay application and processing fees
  • There may be an annual fee
  • There may be a higher interest rate than for an unsecured card

What Does the Scam Consist Of?

Some companies use TV, newspapers, and postcards to deceptively advertise credit cards. The unsuspecting consumer is led to believe that he can get a card simply by calling a phone number. This number may be a 900 number and you may be assessed charges for calling. You may then be told to call other 900 numbers for more information, all at additional charges. The cost of calling the number listed may not be disclosed in the ad.

Avoiding Being Scammed

There are some things that you should remember when confronted with such an ad:

  • Do not call ads with 900 numbers – After having to pay any fees incurred from calling such a number, you may receive no card at all.
  • Be wary of cards offered by "credit repair" companies -They may offer to clean up your credit history for a fee. You do not need to go through these companies to clean your credit history. Instead, you should try contacting a credit bureau.
  • Do not fall for offers of easy credit – You can never be guaranteed credit.

Preventing Credit Card Fraud

Individuals may prevent credit card fraud by exercising certain practical safety precautions, including:

  • Not giving out credit card or PIN number information unless dealing with a trustworthy business;
  • Destroying receipts immediately or storing them in a safe location;
  • Never leaving cards out in the open;
  • Not writing PIN numbers and storing them in an individual's wallet; and
  • Enrolling in online statements which allow an individual to view charges instantly online.

Another important step individuals can take is to regularly obtain a credit report. A credit report will help an individual determine what outstanding loans and obligations exist under their name.

Protecting Yourself Against Identity Theft

Identity theft occurs when criminals gain access to your identifying information, such as your name, address, Social Security number, banking information, or credit card information. This is accomplished in a variety of ways from robbery, to mail theft and dumpster diving, to computer fraud and phishing.

The best way to protect yourself against identity theft is to protect your bank and credit card information. This generally entails incorporating some privacy-protecting measures into your daily routine.

Tips for Preventing Identity Theft

  • Review your credit card statement. Your credit card statement is a big indicator as to whether someone else is illegally using your credit card information. Check your statement on a regular basis and look for unusual charges. If your credit card statement stops coming in the mail, notify your credit card company immediately; it is possible that an identity thief has ordered a change in address to prevent your from noticing unusual charges.
  • Protect your incoming and outgoing mail. Promptly bring in your mail every day to minimize the risk of it being stolen. Put a hold on your mail when you are out of town or ask someone that you trust to pick it up for you. When sending out mail, take it to the post office rather than leave it in your mailbox.
  • Shred documents containing personal or financial information. Shredding sensitive documents before you throw them out will eliminate the risk of dumpster divers coming across your personal information. Shred any bank or credit card statements, medical forms, and even credit card applications.
  • Cancel lost or stolen credit cards immediately. In the event that your card has been stolen by an identity thief, this will minimize the risk of the thief using your credit card to open additional accounts. In addition, remember not to leave your credit cards in your car or desk at work where they might be stolen.
  • Only use your Social Security number when absolutely necessary. Do not keep your Social Security card in your wallet or purse; do not put your Social Security number on checks; and when you are asked for you Social Security number, be sure to ask if it is absolutely necessary.
  • Do not provide sensitive financial information solicited over the phone or via email. A legitimate financial institution would not call or email seeking sensitive information. This type of information is best conveyed over a trusted and secure website. If you are calling your bank or credit card company yourself, that is one thing, but don't take callers for their word if they claim to be from a financial institution and are requesting sensitive information over the phone.
  • Purchase virus protection and create passwords for all electronic devices. Creating passwords for your PC, laptop, smartphone, and tablet will ensure that sensitive information is inaccessible in the event that any of these devices is stolen.

What To Do If I Am Victim of Credit Card Fraud?

It is essential for an individual to report a stolen credit card immediately to the issuer of the card. Most companies have 24 hour phone lines available for individuals to report if their card is lost or stolen.

Additionally, there are other agencies which individuals can contact, including:

  • The Federal Trade Commission (FTC), which submits an individual's complaint to a center that lists fraud across the country to help local law enforcement; and
  • The individual's local Consumer Protection Agency.

Pursuant to federal laws, the maximum liability of a credit card holder for a lost or stolen credit card is $50 upon reporting the card lost or stolen.

Possible Defenses to Financial Fraud

There are several possible defenses to a charge of financial fraud, including:

  • Insufficient evidence, when a prosecutor or insurer is not able to meet the burden of proof needed to prove that a fraud occurred;
  • A non-fraudulent statement. One element of the offense of financial fraud is making a false, or fraudulent, statement. If a defendant is able to show that the misleading fact was actually an opinion or that the statement was technically true, then fraud did not occur;
  • Entrapment, which occurs when the government compels an innocent individual to commit a crime they otherwise would not have done for the purpose of trying to trap them in the crime; and
  • Absence of intent of financial fraud. Fraud includes an action to deceive. The prosecutor or insurer has the burden of proving deceit. The defendant would have to show that they did not have the intent to commit financial fraud.

How Can A Lawyer Help Me With My Credit Card Theft Issues?

It is important to consult with an experienced fraud attorney if you have any issues, questions, or concerns with credit card fraud. Credit card theft can carry very significant legal penalties with it. If you believe that you have been involved in a credit card theft violation, you may wish to speak with a fraud attorney in your area. Hiring an attorney can ensure that your rights are protected, and that you are informed of all the options in terms of legal courses of action.