Credit card fraud---a kind of identity theft that can be financially ruinous---has given rise to several myths that lead many of us to be overly concerned about some issues---and too little concerned about others. Let's discuss the risks of credit card fraud, and how you can properly protect yourself.
Understand the Risks
The least of your concerns is using your credit card on the Internet, provided you're working with a legitimate vendor, and your credit card information is encrypted. (Look for a small lock icon in the corner of your web browser; the lock means that it's impossible to steal your number in-transit to the vendor.)
The theft of most credit card numbers occurs not at the point of purchase but from insecure storage of credit card information at the central servers of large vendors. Unfortunately, that means that all credit card users are subject to fraud, regardless of how carefully they personally handle their credit card information; once it's in the vendor's computers, you have no control over what happens to it.
Therefore, a fatalistic attitude is probably the easiest posture to adopt. Everyone using a credit card is at risk, so take the following steps to make sure you're not one of the victims. And, of course, make sure your card is physically under your control at all times.
Monitor Your Accounts
The best way to ensure you're not a victim of fraud is to watch your accounts like a hawk. Your monthly statements should be a reminder to review every transaction, to make sure that all of them are legitimate charges. This protects you against both fraudulent activity, as well as sleazy activity (for example, vendors who sign you up for monthly charges without your explicit approval). If you wish to do this more often, use Internet banking to check your credit card statement as frequently as you like.
Be especially careful about charges that can incur additional fees---cash advances of any kind or charges that push you over your credit limit. When these occur, you'll have to reverse both the fraudulent charge and the additional fees.
If you use a debit card connected to a bank account you have fewer legal protections than users of standard credit cards. To prevent a fraudulent charge from draining your entire savings, consider keeping your money in multiple accounts, leaving just enough in your debit account to handle your regular transactions.
Contact Your Issuers--and the Authorities
When you find a transaction that you believe is fraudulent---or just questionable---call your credit card provider immediately. The phone numbers are printed on the back of your cards; it's a good idea to write these down in a separate location in case your cards are stolen. Even if the charge is not fraudulent, this review with your provider can help you stop regular renewal charges for services you no longer use.
If your provider indicates that the charge is fraudulent (rather than merely accidental), ask whether you should report the charge to the police. Most fraud violates state and federal laws---and the best way to protect yourself and your neighbors is to prevent criminals from doing it again.
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