Credit cards have become our best friends. There are a lot of things that we cannot purchase outright, but with the help of plastic, we may consider buying it. The ease, convenience and flexibility of using the funds are major reasons, we rely on our cards. But lately, there is a rise in the number of scams that put the security of our cards in a negotiable position. Even as the UK is under lockdown due to the pandemic, Action Fraud, UK’s national reporting centre for fraud and cybercrime has released shocking figures. According to the report, over £16 million have been lost on online shopping during the lockdown.

So, what is a credit card fraud, and how can you become vigilant to prevent it?

What is credit card fraud?

Credit card fraud or scam is when someone you haven’t “authorized” uses you’re your card or credit card account to make purchases. There are mostly 2 ways through which fraudsters may steal your personal information:

  • You have your card or it might have been stolen
  • Unsecured and phoney websites
  • Fake emails
  • Credit card cloning

What are the signs of a credit card fraud?

It is possible to prevent credit card scams if you know the signs. Here are a few tell-tale signs of a potential credit card fraud:

  • Unfamiliar transactions on your bank statements
  • Available credit balance lower than what it should be
  • Transactions in the name of business registered at a place you’ve never visited
  • Your card getting declined when you are trying to make a payment
  • Suddenly, you get a message that you have exceeded your credit limit

How can you prevent a credit card fraud?

Fraudsters can gain access to your personal information such as name, birthday, and credit card number from a lot of sources.

Suppose, you were shopping for a pair of kicks on a trusted eCommerce website and you thought of exploring more options. While doing so, you stumbled upon a website and you felt like buying a pair of kicks that they have. Without verifying the reliability of the website, you went ahead and made the payment, thinking that you will receive an order confirmation on your number. But the money in your account may get stolen if the website is phoney.

Here are a few tips to help you protect from a possible credit card fraud:

  1. Do not enter your personal/financial information on a website that is not secured. Check for a “padlock” symbol in the URL, or check for “https”. Sites that are running on “HTTP” are not secured and any information you enter on that site is not protected.
  2. Do not use your credit card in machines that look tampered. Your card may get cloned.
  3. Check your bank statements and credit card statements regularly and if you spot anything unusual, report it to the bank immediately.
  4. If you have closed an unused account and you’re disposing of its credit card, ensure that you destroy the magnetic strip of the card.
  5. Do not share your PIN with anyone and try to shield your PIN if you are entering it while strangers are standing behind you.
  6. Do not provide any information about the card on phone or via email.
  7. Avoid using public Wi-Fi for making transactions.
  8. Ensure to log out of your bank accounts when you are using a public computer.

How do I report credit card fraud in the UK?

Credit card fraud can happen anytime. According to Experian, financial fraud has risen by 14% in 2019 and fraudsters are aiming young people who are first time home buyers. If you think you are a victim, then you must:

  1. Immediately contact your bank or credit card company to block the card.
  2. Log in to account and change your PINS and passwords.
  3. Report this to Action Fraud by calling them or by reporting it on their online tool.
  4. You may also report it to the Financial Conduct Authority.
  5. Contact Credit Reference Agencies to know if imposters have applied for credit on your name.

How a credit card fraud affects my credit score?

Mostly, there are 2 ways in which your credit score will be impacted. But the best thing about credit scores is – you can always improve them if you take the right steps.

1. Credit utilization ratio

Fraudsters may use up the total available balance on your card leaving a huge dent on your credit utilization ratio. If the ratio goes over 30%, a few points will be knocked off from the score. This will be temporary.

2. Late repayments

New credit or financial products may get applied for by the imposters. And most probably, they will use the funds and never repay it back. It will bring down your score.

If you spot the signs of a scam early, then the impact can be minimized. Understandably, you cannot completely eliminate the risks of being exposed to a scam. However, there are a lot of precautions that you can take to avoid getting into one.