7 Common Examples of Credit Card Fraud & Online Shopping Scams

Do you use a credit card regularly? If the answer is yes – and it is for most Americans – then you may have already been a victim of credit card fraud or fallen for one of the online shopping scams that always seem to be around.

The truth is that online shopping is, as the saying goes, a double-edged sword. It is convenient and quick. You can do your shopping from the privacy and comfort of home. However, there are also many opportunities for bad actors to steal or try to steal your information.

The key to protecting yourself is being knowledgeable about the most common scams and fraud attempts, so you can avoid them. We compiled some data and asked financial experts for help and they delivered. Here are seven common examples of credit card fraud and online shopping scams that you should know about.

#1: Random Credit Card Numbers

You might think that a thief would need to either obtain your credit card or, at least, your credit card number, to steal from you. Unfortunately, that’s not the case with one common type of credit card fraud.

Lisa Torelli-Sauer of Sensible Digs told us:

“Fraudsters will use computer programs that randomly generate card numbers. The card numbers will be tested with small ‘test charges’ to determine which number combinations belong to an actual credit card. When the fraudsters get an approved transaction, they know they have a valid credit card number. Then, they will attempt much larger purchases on the account.”

Fortunately, there’s an easy fix for this issue: reviewing your credit card statements thoroughly. We know a lot of people who barely glance at their credit card statement when it arrives – or when they log into their account to pay their bill.

Checking every charge on your statement will ensure that you catch anything fraudulent or unexpected. In the event you find something you don’t recognize, call your credit card company immediately. You may also be able to sign up for transaction alerts through your bank.

#2: Small Purchases

If someone bought a new iPhone or booked a luxury vacation to Fiji with your credit card, you’d probably notice it immediately. High dollar amounts naturally get more scrutiny than small ones do.

One common method for people who steal credit card information is to make small online purchases. Online purchases are less likely to raise suspicion because a website can’t check identification or compare signatures. As long as the person in question has the necessary information, the transaction will be completed.

The argument for making small purchases is that they are less likely to garner attention than large ones. Your credit card company might eventually catch on to unusual activity but by the time they do, you could have a big problem on your hands.

The same advice we mentioned in the previous example applies here. You should always review your credit card statement and flag anything that you don’t immediately recognize. Keep in mind that charges may appear under a company’s corporate name instead of a store name, but don’t make any assumptions. Investigate anything that seems strange and notify your credit card company of any unauthorized charges.

#3: Big Ticket Items, Big Scams

Shopping online is popular and easy. As of 2021, Statista estimates that 230.5 million Americans will do at least some of their shopping online. That’s an increase of 10% since 2016 and there’s no end in sight to the growth.

Part of online shopping is bargain hunting. You might not be able to visit two stores at the same time but it’s easy to have multiple tabs open on your computer or phone to hunt for bargains. The key is to keep the old adage in mind: if it sounds too good to be true, it probably is too good to be true.

Some scammers create websites where they list big-ticket items at reduced prices – prices so low that they are irresistible to shoppers. The problem? They don’t have the products and you won’t ever get them, either. The site is there only to collect credit card information from eager shoppers.

The best way to avoid this type of scam is to buy only from reputable companies. If you’re not sure, try Googling them to find out whether there are complaints about them.

#4: Spoof Websites

Review the email in your spam folder and you’ll almost certainly find at least one message that looks like it’s from a company that you know: Amazon, Target or PayPal, to name just a few. When you review these emails – or when they land in your inbox – it’s essential to pay attention and confirm they are what they appear to be.

One of the oldest and most common online shopping scams is to create a “spoof” website. The website will use the logo of a well-known company and may appear nearly identical. But, a look at the browser bar and the URL listed there may tell a different story. A legitimate URL for Target for example, would start with Target.com. A spoof address might say shoptarget.com or something of that nature.

The easy fix for this attempted scam is to review every emailed link before clicking it and, if you’re not sure what the store’s URL should look like, Google it first. Target’s real website is right at the top of Google and you’ll easily be able to confirm whether you are looking at a legitimate page or a spoof.

#5: Point of Sale Skimming

Online shopping isn’t the only time when your credit card information is at risk. Alex Miller, Founder & CEO of UpgradedPoints.com told us that cardholders should be wary of credit card skimming.

“Skimming [is] where your magnetic strip or card number are recorded while you use the card at a merchant.”

Most often, people skim credit card or debit card numbers by installing devices on ATMs and credit card machines. The skimmers download card numbers and may be coupled with a camera to capture PINs as well.

The good news is that if you know what to look for, you can spot and avoid skimmers. The tell-tale signs according to PC Magazine are:

  • Materials that are a different color and design than the rest of the machine
  • Arrows that don’t line up or are slightly “off” in appearance
  • Card slots that appear to be oversized or bulky

A good rule of thumb is that if something feels off about an ATM or credit card scanner, don’t use it. You should also be aware that chip-enabled cards may be vulnerable to “shimmers” – tiny scanners that are installed inside the card reader. They are far more difficult to spot than skimmers. They allow thieves to steal the same information as a skimmer, but the encryption in a chip card will prevent them from replicating the chip itself.

#6: Phishing

Phishing is one of the online shopping scams that has been around virtually since the invention of the world wide web. It involves emailing (or these days, posting on social media) a link offering a coupon or deal. It may also be an alarming email saying that your account has been suspended.

The same rules apply to phishing scams that applied for spoof websites. Never click on an unknown link in an email. You can check the URL by hovering your cursor over the link and looking at the address that displays on your screen. If it doesn’t look legitimate, don’t click on it. And, if you’re worried that there might be a problem with your account, navigate to the site yourself, log in and check your status or change your password.

Here are some other ways to spot phishing scams:

  • Pull up an old email from the company in question and compare the greetings. For example, a legitimate PayPal email will have your first and last name. A phishing email might have only your first name or something generic such as “PayPal User.”
  • Review the spelling and grammar. A lot of times, phishing emails have tons of spelling mistakes that would never get by the marketing department at a reputable company.
  • Use common sense. No bank or credit card company is ever going to ask you to divulge your PIN in an email or social media post. It pays to be skeptical.

Viewing everything with a critical eye is a good way to avoid being caught up in a phishing scam. Most email providers have a mechanism for reporting phishing emails, and doing so will help other people as well as making it less likely you’ll get a second email from the same thief.

#7: Social Media Scams

With more people buying on sites such as Instagram, Pinterest and TikTok, it’s important to be vigilant about scams there, too. While these sites make some effort to verify ads before they are posted, they don’t always do as thorough a job as they should.

We recommend applying the same rules we have already mentioned. Check the URL of the site, buy only from reputable retailers and be wary of any deal that seems too good to be true.

Credit card fraud and online shopping scams are common but that doesn’t mean you need to fall prey to them. Being aware of the seven examples we have mentioned here will help make you a savvy (and safe) shopper.

Do you need a secure credit card? Click here to apply for an Addition Financial credit card today!

The content provided here is not legal, tax, accounting, financial or investment advice. Please consult with legal, tax, accounting, financial or investment professionals based on your specific needs or questions you may have. We do not make any guarantees as to accuracy or completeness of this information, do not support any third-party companies, products, or services described here, and take no liability or legal obligations for your use of this information.


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