What to Do If You Spot Fraudulent Activity and Transactions

You’re reviewing your bank statement or credit card statement and you notice fraudulent activity. It’s one of the most alarming and frightening things that can happen and it’s essential that you know what to do if it happens to you.

At Addition Financial, we want to make sure that our members know what to do if and when fraudulent transactions show up on their accounts. We conferred with some financial experts to get their advice on what to do and which steps to take if you see fraudulent activity on your credit card.

Call Your Credit Card Company or Financial Institution

When a fraud is perpetrated, it’s common to learn of it because you are notified by your credit card company. Most companies, when they spot suspicious activity, have safeguards in place to contact the cardholder and verify the charge. If that happens, the person who contacts you will walk you through the fraudulent activity, so you can identify legitimate charges.

If you aren’t notified by a financial institution, it most likely means that you have spotted a suspicious charge or transaction. Darren Tobin is a personal injury lawyer and the owner of Tobin Injury Law. He told us:

“Once you are suspicious of identity theft, you need to contact your bank and credit card companies. They will want to know which charges are suspicious. They will conduct an investigation.”

Keep in mind that sometimes, online transactions may appear under a corporate name that doesn’t match the website name. That’s why it’s a good idea to call and confirm that the charges are fraudulent if you’re not sure. If you report charges immediately, it limits your liability, so you should review your statements regularly.

Place a Hold on Your Credit Cards

If you do verify that there has been fraudulent activity on your card, then the next step is to minimize the damage and make sure the person who used the card without authorization cannot continue to use it.

Nishank Khanna, the Chief Financial Officer of Clarify Capital, told us:

“Place a hold on your credit card so that no further damage can be done. Most card holders are able to freeze their card from a mobile app or computer. It’s important to act quickly once you notice any fraudulent activity.”

Depending on the circumstances, your credit union or bank may decide to issue a new card with a new number. Either way, freezing the card immediately will ensure that there are no additional fraudulent transactions on your card.

Many credit unions and banks offer account holders the option to freeze a card via a mobile app or online banking. In many cases, that will be the quickest way to prevent additional fraudulent charges from going through on your account.

Keep in mind that you may need to review recurring charges on the card in question. You’ll need to update those payments with your new card information to ensure that your payments are made in a timely manner.

Freeze Your Credit

While placing a hold on any accounts that have been compromised is a good idea, you may want to take it a step further and freeze your credit entirely until you can get a handle on the fraud that has occurred.

A credit freeze is a free service offered by all three of the major credit bureaus. You will need to call them or visit their websites to put a freeze on your credit. When you do, you will receive a password or PIN from each bureau and you will need that information to unfreeze your credit.

The contact information for the three credit bureaus is as follows:

  • Equifax can be reached online at their website or by phone at 800-685-1111
  • Experian can be reached online at their website or by phone at 888-397-3742
  • Transunion can be reached online at their website or by phone at 888-909-8872

Freezing your credit will not prevent you from applying for a job, renting an apartment or buying insurance. If you want to apply for a new account of any kind, you will need to lift the freeze, at least temporarily. You can freeze and unfreeze your account for free using the password or PIN.

Report Identity Theft to the Federal Trade Commission

Fraudulent activity may happen in a variety of circumstances. For example, one scenario would be if hackers breached security at a company where you used your credit card. They would have the information for that card only, meaning that they will not have stolen your identity.

However, if you’re reviewing your credit report and you see an account you don’t recognize, you may be a victim of identity theft. If that’s the case, you should freeze your credit as noted above to prevent any additional charges. You should also identify the unauthorized account, so you can close it – something we’ll talk more about in the next section.

If you suspect that your identity has been stolen, then you will need to report it to the FTC. You can do that by visiting IdentityTheft.gov and filing a report. The FTC website also has resources to help you recover from identity theft.

Dispute Individual Charges

While putting a hold on your card is important, it is equally essential to review your account statement and identify any fraudulent transactions you see. There are time limits for reporting that may impact your liability, especially with debit card fraud.

Robert Siciliano CSP is an author and the CEO of Safr.me. He told us:

“On a credit card, contact [the] issuing card company and refute charges as quickly as possible. Best case is within a single billing cycle otherwise with federal law you have up to two billing cycles. With a debit card it is important to [pay] even closer attention to your charges. By federal law you only have two days to refute unauthorized charges.”

With a credit card, your liability is limited to $50 but reporting immediately will save you from any liability. However, with debit cards your liability can, in some cases, be unlimited. If you dispute the charges within 48 hours, you’ll only be responsible for $50. However, if you go beyond that, you could be liable for up to $500 within six months. If you wait longer than that to report, there is no limit on your liability.

Set Up Push Notifications with Your Credit Card Company or Bank

In addition to the advice in the previous section, Robert Siciliano also made the following suggestion to reduce liability:

“It is best to set up ‘push notifications’ or ‘push alerts’ via your card company or bank to get notification of charges in real time via text and email.”

The benefit of push notifications is that you will receive a real-time alert any time your card is used. While it’s undeniable that the notifications may be distracting, getting them will ensure that you know what is going on with your card at all times. If you see any charge that you don’t recognize, then you will be able to contact your financial institution immediately.

File a Police Report

Sometimes, people who spot fraudulent transactions on their cards don’t bother to file a report with their local police department because they aren’t sure who the perpetrator is. Our advice is to take the extra step and file a report. At the very least, it means that there’s another potential avenue for the thief who stole from you to be brought to justice.

Your best bet is to print a copy of your report to the FTC and bring it with you to the police station. You should also bring detailed information about the fraudulent activity you have identified. That way, the police will have the guidance they need to investigate any crimes that have been committed.

Keep in mind that the police may not be able to identify the culprit. You should follow up periodically to see what the status of the case is and keep your expectations realistic.

Use a Mobile Wallet

Once you’ve done everything you can to report the fraudulent activity on your account and protect yourself against future theft, there’s one final step you can take that will make it nearly impossible for anybody to steal your credit card information again.

Mobile wallets such as Google Pay, Apple Pay and Samsung Pay offer consumers a safe way to use their credit cards online and in person. When you use these methods, which are contactless, you do not share your credit card information with retailers or vendors. Instead, the mobile wallet tokenizes your information, which means that they assign a one-time token or code to the transaction. The token is the only information that the retailer or website receives and it works only for a single transaction. Someone could steal it but it would be useless to them.

There’s no question that spotting fraudulent activity or transactions on your account is stressful and upsetting. However, if you follow the advice from our experts, you’ll be able to report the unauthorized activity, minimize your liability, protect your credit and shield yourself from future theft.

It’s time to partner with a financial institution that values your security. Click here to become an Addition Financial member 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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