Risks of Fraud

Credit card fraud can take a variety of forms:

  • Thieves may use your credit card information to make unauthorized charges to your account. It can happen if your credit card or the information on your card is stolen.
  • Account takeover is another form of credit card fraud. In this case, the thief learns enough personal information about you to ask your card issuer to change the account’s billing address. Then the thief reports the card lost or stolen and requests a replacement card, which is used for fraudulent charges. 
  • Application fraud refers to someone opening a credit card account in another person’s name. The thief may gather enough of your personal information to open an account or may create counterfeit documents to open the account. This type of credit card fraud can be particularly difficult for victims to detect. 

How Fraud Happens

Thieves employ many methods to obtain your credit card or personal information:

Data breaches

Millions of accounts have been compromised when hackers accessed databases at major retailers and stole credit card data.

Tip: Always check monthly statements or review transactions through online banking to check for unfamiliar charges.

Lost or stolen card

Any time your card gets into the wrong hands, there is a potential for fraudulent use. 

Tip: Don’t let your card out of your sight when completing a transaction. If you notice your card is missing, contact the card issuer immediately to have the card canceled and alert them to the possibility of unauthorized charges.


This fraud takes many forms, including unsolicited phone calls, emails, text messages or social media messages claiming to be from your bank or credit union. You may be asked to click a link or call a phone number to “verify” your account information. Once there, you’re requested to enter credit card or personal information. The phisher will use your information to commit fraud. 

Tip: Don’t give out sensitive information in response to unsolicited messages.


Thieves may attach a device to ATMs or point-of-sale terminals requiring a PIN; this is called skimming. The device “skims” your magnetic strip or EMV chip credit card information for fraudulent purposes. 

Tip: Before inserting your card, look for anything suspicious about the card reader.

Intercepting online transactions

When you use an open wireless network, such as free Wi-Fi in a coffee shop, it's easier for hackers to intercept card numbers, passwords and other private information. 

Tip: Save online banking and shopping for when you’re using a secure network.

Credit Card Scams

Debt Relief Offers

Scam artists may target people with high credit card debt and falsely promise to negotiate with your creditors to settle or otherwise reduce the amount you owe. Some promise to reduce your credit card interest rate. They often charge a large, upfront fee, but then fail to help you settle or lower your debts. Sometimes they don’t provide any service at all.

Red flags for these kinds of scams include:

  • requiring payment of a fee before they settle your debts
  • guaranteeing they can eliminate your unsecured debt
  • promising to stop all debt collection calls and lawsuits
  • not supplying free information about their services unless you provide personal and financial information, such as credit card and bank account numbers

Advance Fees

Advance-fee loan scams may be promoted in ads and websites that guarantee loans or credit cards, regardless of your credit history. They target people with bad credit histories who may be turned down—or think they’ll be turned down—by legitimate lenders like banks and credit unions. They may guarantee that you can get a credit card, even if you have bad credit, no credit or a bankruptcy.

Tip-offs that an offer is a scam:

  • The lender isn’t interested in your credit history. If they say they won’t check your credit history, but want personal information such as a Social Security Number or account number anyway, it’s likely a scam. They may use the information to debit your account.
  • Fees aren’t displayed clearly or prominently. Legitimate lenders clearly specify what fees you’ll pay and collect them after the loan is approved.
  • A loan or credit card is offered by phone. It’s illegal for companies doing business by phone in the United States to promise you a loan or credit card and ask you to pay for it before they deliver.
  • The lender isn’t registered in your state. Find your state Attorney General's office at the National Association of Attorneys General website and see if they’re registered. 

Credit Protection

Crooks may use scare tactics and false information to try to sell you credit protection insurance that you don’t need. Your best defense is to be aware of your rights:

  • Under federal law, you’re not liable for any charges if you report your card missing before someone else uses it. If it has been used, your liability is limited to $50 as long as you report the problem promptly.
  • Many cards offer additional protection, free of charge. For example, Navy Federal credit cards come with a zero liability policy, which means you’re not responsible for any unauthorized charges if you report a problem as soon as you discover it. 

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