How to Prevent Credit Fraud

How to Prevent Credit Fraud

Credit fraud has been on the rise in recent years, and it is no wonder since many use the convenience of the internet to buy clothes, groceries, gifts, pay bills and much more. Did you know that since 2010, there has been a total loss of $16 million due to credit fraud. We have seen a rise of 87 percent of those that have been victims of credit fraud. Identity theft is the fastest growing crime in the United States. According to the Federal Trade Commission, there are 9.9 million identity theft incidents a year, with 19 people falling victim to it every minute. And do not think that it has to hit far from home either. More and more are finding that family members are responsible for stealing their identity. Thirty two percent of those that were fraud victims have found that family members were responsible for it.

While credit fraud is very scary, there are some things that one can do to protect themselves. One of the most important steps in doing this is to monitor your credit card statements each month. Make sure that all the charges that are listed have been made by someone that has the right to use the credit cards. Should you see any charge that is fraudulent,contact the credit card company as soon as you notice this. Explain to them that the charge was not made by you. If someone used your credit card without your permission, this means that you have been a victim of fraud. This account will most likely be closed in order to protect yourself more. A new account will be issued to you.

Periodically check your credit report. A credit report is a detailed summary of one’s credit history that has been prepared by one of the three major credit bureaus. This is used to determine if a consumer is creditworthy for loans. On the credit report, there will be personal data, such as name, social security number, and employer, a credit history summary, detailed account information, inquiries about the applicant, and details if any account was turned over to a credit agency. The credit report will also give a credit score to help lenders determine if a person will be reliable enough to pay back a loan. An individual can check their own credit report to see if there is any suspicious activity going on in their name. If suspicious activity is going on, or there are errors that are on the report, the individual must contact that credit bureau as soon as they can. Let them know that you wish to dispute the errors, and give a reason as to why it is not correct.

What sort of things should one look for on their credit report? Look at all accounts, and see if any new ones were opened that you do not recognize. Check all addresses on the report to make sure that you have lived there before. If there is an address that is listed that you do recognize, this might be a sign that someone had used your information for fraudulent credit. Also check all the inquiries marked requests viewed by others. This will tell the consumer if anyone has accessed their credit report to process an application. If you do not recognize who the inquirer is, this may be an attempt at fraud.

Everyone is entitled to receive one free credit report from each of the three major credit bureaus once every 12 months. In addition to this, if an individual is on welfare, has been denied credit, employment, or insurance within the last 60 days, or have been unemployed but are planning on looking for a job in the next 60 days, a free credit report may be obtained.

One easy thing to do is invest in a paper shredder. Many still dumpster dive, and can find information about others this way. Shred any document that contains personal information about yourself or those in your family. If you are unsure, shred it anyway. This is the most popular way for criminals to get a hold of personal information. If you can not afford a paper shredder or do not have access to one, cut or tear the documents into many small pieces. Another alternative is to burn any documents like this.

Another way to protect yourself is to use a credit card instead of a debit card. Credit cards are much safer than a debit card. Under the Fair Credit Billing Act, a consumer is protected if their credit card is stolen. Liability is limited at $50, where a debit card limit is capped at $500.

One great tip is never allow your credit card to be out of your sight when shopping or going out to eat. Too many times we let the cashier or the waiter run off with our card and come back later with the receipt. This just gives an invitation to someone to steal the numbers that they need. The credit card machine should always be brought to the table when paying, or ask to be there when the purchase is rung up. Credit card machines should be on the counters for the consumer to see at shopping centers as well, so there is not a risk of fraud. There is nothing wrong with asking to go with the cashier if they must go into another room to run the card. If they do not allow this, do not allow the purchase to take place, and go somewhere else.

Another way to protect better against credit fraud is to use credit cards that have EMV technology. This technology requires that a PIN number be used in association with the card or else it will not be accepted by sales machines or ATMs. This card has an integrated chip in it. Not all cards have this technology, but VISA and MasterCard do.

It is advised that an individual never carries their social security card with them in their wallet. If your wallet gets stolen, a social security card will give access to too much personal information about the individual. Never carry extra credit cards either. Passports should not be carried if you do not need them, and other documents, such as birth certificates should never be carried around unless they are needed.

Never under any circumstances, give personal information, such as your social security number, over the phone unless you can verify who you are speaking with first. It is often advised that the only way you do give this information is if you called the place of business in the first place.

If you have new checks ordered from your bank, ask if the checks could be delivered to the bank and you will pick them up. It is a lot harder for an individual to steal or alter checks when they are in the bank’s possession. Never have your social security number placed on a check for any reason. If you have to close a checking account for any reason, destroy all checks immediately after the account is closed.

Many individuals are signing up for credit monitoring services that will keep an eye on their credit report for them. With services like these, a consumer is alerted via email to changes that are made on a person’s credit report. This is a great service for those that can not monitor their credit report everyday. A consumer’s report is monitored 24 hours a day, 7 days a week, 365 days of the year. In case there is identity theft, a consumer with such as service can be guaranteed to receive up to $25,000 to help them recover.

A complete list of every credit card account, with numbers and expiration dates should also be kept by the consumer. This list should also contain the contact information for the credit card companies so in case of fraud, the consumer has a way to contact them in an abrupt fashion.

When creating passwords for accounts, be creative. Never use common things for your passwords, such as your date of birth, or your child’s name. Use a random mix of letter and numbers, alternating between caps and lowercase to help ward off theft.

What should you do if you do happen to lose your wallet or purse? The first step is as soon as you realize that it is lost is to contact your financial institution. Credit cards can then be canceled and reissued. If someone stole it, then the local police department should also be contacted. Use the free 90 day service of fraud alert, which will allow lenders to take additional steps to verify an applicant’s identity before any credit is extended to them.

Being a smart consumer can help to prevent against credit theft. Never allow a credit card to be out of your site for any reason, take care to shred any documents that has information that others will need to take over your identity, and if you do suspect any fraud, report it immediately. It is always better to ere on the side of caution than to not do anything about it. Protecting your identity and credit should always be of the utmost concern and should be a huge priority.

*The above content is for informational purpose only. It does not constitute professional financial advice. If you have more questions, please reach out to a financial advisor for more information.