payment card fraudAs the number of highly-publicized, large-scale data breaches increases, the possibility of someone getting ahold of your payment card’s information may have moved to the forefront of your mind. While card fraud can’t be completely prevented, there are some steps you can take to reduce the chances of it happening. To maintain your financial health and protect your payment information, keep reading to learn more about what actions you can take to better prevent payment card fraud.

What is payment card fraud?

Before getting into how you can prevent card fraud, it may be helpful to first review what card fraud is and how it happens. Payment card fraud occurs when someone makes unauthorized purchases using your debit or credit card. When it comes to card fraud, the threat and numbers are large. According to a 2016 edition of The Nilson Report, credit card fraud losses reached $21.84 billion globally in 2015, which was up over 30% from the previous year. Although the introduction of chip cards in the U.S. has slowed the progress of payment card fraud, it hasn’t stopped it altogether.

A common cause of payment card fraud is theft, and it’s good to note that payment card thievery comes in different forms, since there are ways to steal your payment card info with and without tech. For example, your payment card could be physically stolen through pickpocketing or through other physical means. When tech is used for stealing purposes, however, the forms of theft can get even more devious and large-scale. An attacker could hack a company’s system to steal your payment card information, for example – something that’s happened through many recent data breaches, such as the highly-publicized one at Target in 2013. Once the thief has the stolen payment card information, they can use it to complete card-not-present (CPN) transactions made online or via mail, telephone, mobile apps or social networks. Payment card fraud can also come in the form of people creating counterfeit cards based on your card account information, intercepting cards that have been mailed, using a credit card that was lost or engaging in account takeover (e.g., using your personal information to obtain a new credit card). If the thief has a physical card, they can attempt to use it at an ATM or any brick-and-mortar shop.

What are the potential consequences of card fraud?

As you may have guessed, the consequences of card fraud can be severe. Besides affecting you and making it possible for your money to get stolen, fraud also imposes detrimental effects on card issuers, banks and merchants. According to Forbes, when it came to fraud losses associated with credit, debit and some other types of payment cards in 2015, the U.S. accounted for 38.7% of fraud losses incurred by banks and merchants worldwide. In terms of cash, this total loss equated to $8.45 billion dollars, and the U.S. is expected to surpass a loss of $12 billion by 2020. While a bank’s or merchant’s finances may not be concerning to you, especially if you’re covered by $0 fraud liability, it’s important for you to understand that payment card fraud is a growing problem that can also have some serious impacts on your finances.

Ways to protect yourself from payment card fraud

While it may be impossible to completely prevent card fraud, there are certain precautionary steps you can take to reduce the likelihood of you becoming an unwitting victim of fraudsters. Being cautious about sharing your card information may sound like a moot point, but it’s worth mentioning. That’s because it’s easy to be tricked into revealing your credit card information to questionable sources, such as a scammer, who could then use it to commit wrongdoings. But that’s just the tip of the iceberg when it comes to protecting yourself. As the threat of card fraud looms large, here’s what you can do to prevent it.

Be aware of scams

Scams are an unfortunate reality of the age we live in, which means it would be wise for you to understand how most scams work. When you think about how your card information could possibly be shared with questionable sources, perhaps one scenario that comes to mind is a phone scam, a scam that occurs when a caller impersonates someone, such as a company or government agency, to steal your personal information or payment card details. To avoid getting scammed in such a way, be wary if an unknown caller, emailer or messenger offers free items that sound too good to be true – they likely are. Be on the lookout if a caller or someone you encounter online asks for something in return for an offer, such as your account number. Other signs of scams include those who try to emotionally manipulate you or impose time-sensitive deadlines (e.g., pay me by tomorrow or you’ll be arrested), pushing you toward immediate actions you may regret later on.

Make sure no one takes photos of your credit card

You may not know that others could potentially take photos of your payment card without your consent and knowledge, and they can then draw on your payment card’s information to make unauthorized purchases. While it’s not as common as some other scams, a waiter, merchant or someone else could take your card out of sight to capture a photo of it. As such, it’s beneficial to keep your eye on your cards as much as possible and ask questions if someone starts to walk away with your payment card (e.g., they have a register in the front of the store, but they insist on running the transaction in the back).

Similarly, although it may sound silly, now that smartphones and social media abound, it’s also important to remember to not take and upload and share photos of your card. When you’re taking a picture of your amazing meal for your Twitter feed, for example, make sure your credit card isn’t in the shot — otherwise, your photos might get the kind of attention you don’t want.

Understand website security

When you’re online, make sure you’re cautious about what websites you’re sharing your payment card information with. By doing so, you can ensure that you’re providing your information to a legitimate source and making it difficult for hackers to steal and decipher your information. One sign of a secure website is SSL, which means the URL has HTTPS at the beginning. While websites that have SSL certificates can still be malicious, as anyone can purchase an SSL certificate, the HTTPS and green padlock appearing next to an SSL-certified website’s URL let you know the website is encrypted, and, as a result, perhaps more trustworthy. However, as mentioned before, SSL is not foolproof, so it’s a necessity to check a website’s contextual cues to confirm its safety and security. The FBI, for example, suggests doing your research and checking other websites to validate the legitimacy of a given website. Along the same vein, the FBI recommends making sure that you make purchases through reputable sources, such as a major retailer.

Select good passwords

If you want to prevent payment card fraud, picking excellent passwords for your online payment accounts is paramount. By choosing a strong password and changing your passwords regularly (at least every 6 months), you can make it more difficult for criminals to hack your payment accounts online.

Each strong password typically has at least eight characters consisting of a combination of upper and lowercase letters, at least one number and at least one special character (remember that you can usually use spaces in passwords). Make sure your passwords are free of personal identifiers (e.g., your middle name or your child’s name) or other generic, overly-used passwords, such as “123456” or pop culture references. It’s also helpful to avoid using the same password or similar passwords for different accounts, since doing so could help further protect your information.

Thinking about how you can keep track of all your different passwords? No need to worry. Consider using a password manager, a program that can store and retrieve your passwords for you, to make your life a bit easier.

Check balances and statements

To prevent payment card fraud, another necessary precaution to take is to check your payment card balances and statements. While your credit card issuer may contact you in the case that there’s unusual account activity, it’s also beneficial for you if you monitor your balances and statements, checking for any transactions that you don’t recognize and immediately reporting them. By doing so, you can catch possible fraud early on, helping you to reduce the consequences of card fraud.

Opt to dip instead of swipe

While there may be reports that chip cards have increased the number of online credit card fraud cases, it’s safer for you to have a card with an EMV chip than to have one without it. If you pay with a chip card at a point-of-sale system during checkout, which is referred to as “dipping” your card into the machine, your transaction is strongly encrypted and a unique code is generated for each transaction. On the other hand, if you pay with a card that requires you to swipe its magnetic stripe during checkout, instead of having a newly-generated unique code associated with each transaction, the same number, your card number, is attached to every transaction. Because of the unique code associated with each chip card transaction, fraudsters may have a more difficult time tracing a transaction back to your card number. As such, opting for a card with an EMV chip is one other step to take if you want to prevent credit card fraud.

Watch out for card skimming

Another way to protect yourself from payment card fraud is to be aware of card skimming – another trick that some scammers like to pull. Card skimming occurs when scammers obtain your payment information – usually through a physical device placed inconspicuously – from a card-reading terminal, such as an ATM. Different skimmers can be installed and attached to card-reading terminals in different ways, and they usually store or transmit payment information. Because chip cards generate a unique code for every transaction, an EMV card is one way to reduce the likelihood of card fraud resulting from card skimming. That said, a new technique, called “shimming,” pretty much acts as a version of card skimming for chip cards. To prevent card skimming and shimming, don’t be afraid to engage in preventative measures, including shaking payment systems to see if any parts are loose or trying to lift the keypad with your nail before you enter your PIN. If the ATM or POS system looks odd or suspicious, don’t use it.

Run debit card transactions as credit

We’ve said it time and time again: credit is the best form of payment because it has the most fraud protection. Still, if you prefer to use your debit card, request to run your debit card as a credit card. By doing so, you can avoid providing your PIN to the POS system, which may be stored and potentially breached in the future.

Although there’s no surefire way to prevent payment card theft, there are steps you can take to protect your wallet. Learn more about credit monitoring and how that can help mitigate payment card fraud consequences by following our identity theft protection blog.