Preventing credit card theft online is one thing every internet user needs to know. This is because cybercrime is a growing menace today, affecting millions of people. With every new invention to combat fraud, there seem to be countermeasures to bypass security. Everyone must be on guard and protect themselves from credit card fraud. 

Artificial intelligence has not only revolutionized online security but also given cybercriminals better tools to carry out fraud. AI-powered fraud detection systems help financial institutions identify unusual spending patterns, flagging suspicious transactions before they cause harm. However, fraudsters are also leveraging AI to create convincing phishing scams, deepfake identities, and automated hacking attempts that can trick even the most cautious users. This again, emphasises why everyone should know how to protect themselves from credit card fraud online and, that banks, businesses and individuals must start implementing anti-fraud technologies to secure their finances.

In this article, you will learn how to spot if you have been a victim of credit card fraud, how you can implement credit card fraud prevention methods, and finally how to protect yourself from credit card fraud.

 

Understanding Credit Card Fraud

 

Credit card fraud involves unauthorized use of a credit or debit card to make purchases or withdraw cash. According to the Federal Trade Commission, $10  billion was lost in 2023 to fraudulent activities, indicative of a $1.2 billion increase from the last year.

Credit card scams can be hard to spot and can take different forms like an account takeover, cloned cards and others. This can happen through various means, including data breaches, phishing scams, or physical theft of your card details.

 

Why You Should Take Credit Card Fraud Seriously

 

The impact of credit card fraud is substantial and can be the reason for many negative outcomes in business and society. Here are some of the effects of credit card fraud can have on individuals and businesses:

 

1. Financial loss 

Financial loss constitutes the most immediate effect of credit card scams. It leads to the victim affected being responsible for paying back what they didn’t use leading to bankruptcy and depression.

 

2. Impact on business

Scams like this can negatively affect your business especially if your business account falls prey to these schemes. It can result in a loss of customer trust, and increased cost of fraud detection and prevention methods.

 

3. Damaged credit score

A loss of finances through scams can put a dent in your credit score making it difficult to get loans, rent apartments or even secure certain kinds of jobs.

 

How Credit Card Fraud Happens

 

Criminals employ different tactics to carry out their schemes. There are different types of credit card fraud which include: 

 

1. Card Skimming

Cybercriminals use a skimmer- a small device used to steal credit card information from the magnetic strip on the back of the card. Once they get your information, they can clone your card and use your information to withdraw money and make online purchases.

 

2. Phishing

Phishing attacks happen when fraudsters send emails or texts posing as your bank credit card company or some financial institution. They trick the victim into providing their credit card information which they can use to create a clone and steal their money.

 

3. Malware

If you mistakenly or unknowingly download malware on your computer, it can operate in the background completely undetected and capture your credit card information when you enter it to shop online.

 

4. Card Not Present (CNP) transactions

Fraudsters can acquire credit card numbers by buying them from a data breach or stealing them. They do not necessarily make a clone of the card but only use the information for online purchases.

 

5. Weak Passwords

Card owners with easy passwords run a risk of fraudsters hacking into their card accounts. It is advisable to use passwords that are difficult to guess to properly secure your account.

 

Fraudsters also use credit card applications for fraud in different ways. A few of them include: 

 

6. Synthetic identity fraud

This involves making a fake identity mixed in with real and fake information to apply for a credit card. They verify the persona with a real social security number (SSN) but with a fake name and address. Because the information has been verified through SSN, they’re approved to assume the fake identity and use a real credit card.

 

7. Stolen identity fraud

Sometimes fraudsters can steal someone’s identity completely and apply for a credit card in their name. They can get a victim’s personal information through data breaches and phishing scams. If they can cheat through verification, they can get a credit card and make transactions using their information.

 

8. Authorized user fraud

This is also known as authorized payment fraud and it happens when a fraudster convinces a person to add them as an authorized user of their credit card. They can also convince the cardholders to make fraudulent purchases as well. This scheme adds another layer of mystery to them and helps them avoid detection.

 

Related: Credit Card Fraud and Identity Theft: Differences

 

Signs That You Might Be a Victim of Credit Card Fraud

 

Here are some tell-tale signs you might have suffered from a credit card scam:

  • You notice strange online purchases
  • Payment notifications from other locations
  • You are missing some mail
  • You get emails asking you to verify purchases
  • Your card declines
  • You notice a change in your account information

 

Preventive Measures for Credit Card Fraud: How to Prevent Credit Card Theft Online.

 

Users often have one common question, How to avoid credit card fraud? You can apply these simple financial security tips to secure online transactions:

1. Keep your details secure

Never share your credit card PINs mobile application passwords or Internet banking tokens with anyone. It doesn’t matter if they’re your friend or family or over an email. You might just be giving away your details to a fraudster. Following best practices for data privacy will help you reduce the risk of credit card fraud and stay compliant.

 

2. Beware of viruses and phishing programs

Phishing is much like throwing in bait to catch a fish. Fraudsters can trick customers into revealing vital card numbers, CVV numbers and expiry dates over phone calls and texts. They can use familiar logos and email templates to make the scam even more believable and similar to the real thing. Always remember that your financial institutions will never ask you for details via phone, email or text.

 

3. Identify skimming

Skimming happens when a fraudster steals a customer's credit card details during a real transaction on a POS device or an ATM and uses the information to design a fake card. The thief can make purchases when the physical card is not available. Make sure to never let your card out of your sight while using a POS device. EVM chips can help reduce skimming but make sure to report unusual activity when you use your card in a machine or device.

 

4. Pay from mobile wallets 

Mobile wallets make payments at stores safe as they use tokenisation technology. They only save the required amount needed for a transaction, and the merchant will never ask for your credit card details. Your phone usually has a fingerprint scanner or authentication system used to verify transactions. This prevents anyone from making transactions with your phone.

 

5. Set a payment limit

Your credit card has the facility to set a payment limit on ATM withdrawals, POS transactions, online merchants or e-commerce platforms. Once you reach the payment limit, you can no longer make transactions. It is best to switch the settings to the minimum amount you need for day-to-day expenses. You can always adjust this setting on your mobile application.

 

Related: Fraud Prevention Solutions for Banks

 

Protect Your Business from Credit Card Fraud with Youverify

 

Staying ahead of fraud requires proactive security measures like regular transaction monitoring and stringent identity verification. At Youverify, we provide cutting-edge fraud prevention solutions tailored for banks, compliance officers, and businesses. Our comprehensive suite includes AI-powered customer onboarding and verification, AML and sanction screening, and real-time transaction monitoring solutions —ensuring you stay compliant while preventing unauthorized activities.

With Youverify’s advanced fraud detection and identity verification tools, you can safeguard your financial operations, reduce risk, and enhance customer trust. Don’t wait for fraud to happen—take control now. Request a FREE demo today with our Fraud Expert and discover how Youverify can help you stay one step ahead of financial crime.