Know your rights when facing credit card fraud

Credit card fraud has been on the rise in recent years. The Federal Trade Commission’s most recent database indicates that there were more than 416,000 cases of credit card fraud reported in 2023, making it one of the most common forms of identity theft.

Fortunately, there are many systems in place to protect you from potential credit card fraud. Two-factor authentication gives you the opportunity to confirm your own identity before accessing bank accounts and other financial services, and credit freezes allow you to prevent people from taking out new lines of credit under your name. Digital wallets and virtual credit cards provide even more protection during in-person and online credit card transactions.

If you do become the victim of credit card fraud, you have rights. The Fair Credit Billing Act (FCBA) offers consumer protections against inaccurate or fraudulent credit card charges and other billing errors, and many credit card issuers offer zero-liability fraud protection that protects you from owing money when your card is used fraudulently.

Here’s how to take advantage of those rights and get your life — and your finances — back in order.

Spotting credit card fraud

One of the best ways to spot credit card fraud is by reviewing your credit card transactions on a regular basis. Some people check their online account or app every day or every week, looking over recent charges and confirming their accuracy. Other people use their monthly credit card statement as an opportunity to review transactions and make sure everything looks correct.

In many cases, your credit card issuer may spot potential credit card fraud before you do. You might receive a mobile alert, for example, asking you to verify whether your most recent credit card transaction was legitimate. This doesn’t necessarily mean that your credit card account has been hacked, of course. You may receive this kind of mobile alert when you make an unusually large purchase or when you make multiple back-to-back purchases at the same retailer. Your issuer simply wants to make sure that the charges are coming from you and not from an identity thief.

Sometimes your credit card issuer will lock your credit card until you confirm or deny the authenticity of a recent charge. This prevents a potential fraudster from making multiple charges on your account. While these kinds of credit card locks can be annoying, they’re one of the best ways to protect you from credit card fraud.

Reporting credit card fraud

If you notice fraudulent charges on your credit card, here’s what you can do to report the charges and protect yourself:

• Notify your credit card issuer immediately. Start by calling the number on the back of your credit card. From there, you should get more detailed information on what to do next.
• Change your passwords. After you discuss the fraud with your credit card issuer, it’s a good idea to change the passwords on your credit card accounts. You may also want to change the passwords associated with online banking, online shopping, email accounts and so on.
• Send your dispute statement, if necessary. If your credit card issuer requests a dispute statement, use the FTC’s dispute letter template to craft your dispute. Then submit the letter to your credit card issuer as directed—either through the mail or online.
• Continue making payments on your credit cards. While credit card issuers cannot try to collect payment, charge interest or report any late payments on disputed charges, you’ll still need to make regular monthly payments on any other outstanding credit card balances.
• Wait for your new credit card to arrive. If there is any potential evidence of fraud on your account, your credit card issuer should send you a new credit card with a new 16-digit credit card number. You may receive an instant-use credit card that allows you to make online purchases and use digital wallets while you wait for your physical card to arrive in the mail.
• Update your accounts with your new credit card number. Once you have your new credit card number, you may need to update accounts with utility providers, online retailers, subscription services and so on. If you haven’t already updated your digital wallet, you’ll want to do so now as well.

Are you liable for fraudulent credit card charges?

Many credit card companies offer zero-liability fraud protection if you report charges within 30 days. This means that you won’t be liable for any fraudulent purchases made on your credit card account.

The Fair Credit Billing Act limits your liability to $50 if you report fraudulent charges within 60 days of receiving your credit card statement. This means that even if your credit card issuer doesn’t offer zero-liability protection, you won’t owe more than $50.

If you fail to report the credit card fraud within the time limits, you may be responsible for paying the entire bill.

Protecting yourself from credit card fraud

One of the best ways to protect yourself from credit card fraud is by freezing your credit. While your credit is frozen, it is impossible to open new credit cards, take out new loans or apply for new lines of credit under your name.

Each of the three major credit reporting bureaus (Experian, TransUnion and Equifax) allows you to freeze your credit for free, and you’ll need to unfreeze your credit when it’s time to apply for a new credit card or take out other forms of credit.

You also have the right to place a fraud alert on your credit report. This lets creditors know that if someone applies for credit in your name, they should take steps to verify whether it is indeed you. If you place a fraud alert with one of the three credit bureaus, it will automatically update the other two bureaus with the fraud alert request.

Lastly, consider signing up for a credit monitoring service that can track not only your credit reports and credit score, but also potentially fraudulent activity and situations in which your personal information may have been compromised.

Do you need to file an identity theft report?

If you are a victim of credit card fraud, you may want to file a Federal Trade Commission identity theft report. After you file the report with the FTC, send it to the credit bureaus along with proof of your identification and a letter providing input about the fraudulent charges. This way, you can work on blocking inaccurate information from getting onto your credit report.

After you report to the credit bureaus and provide a copy of your FTC identity theft report, the credit bureaus will tell the lenders involved that you are a fraud victim. This means that lenders cannot pass the debt to collections.The credit bureaus will also investigate and make changes to your report to remove the fraud from your credit history.

The bottom line

If your credit card has been used fraudulently, you have rights. Reporting credit card fraud within 30 days limits your liability and helps you get your finances in order as quickly as possible. Start by contacting your credit card issuer, and consider changing your passwords, freezing your credit and signing up for a credit monitoring service to prevent future attempts at fraud.