It’s a normal day. You sit down to pay some bills and, as a matter of course, you read through your credit card statement. Suddenly, everything changes. You see a charge that you don’t recognize, something you didn’t authorize.
What do you do next?
At Addition Financial, we understand how upsetting it can be to realize that there are unauthorized transactions on your credit card statement. It’s natural to feel panicked and angry. For many of our members, it can be a moment when they freeze and don’t know what to do.
We’re here to help. Instead of panicking or freezing, you can follow the guidance we’ll give you here, gleaned from some top financial experts who know how to deal with credit card fraud. This is what you need to know.
Review Credit Card Statements
The first step to dealing with unauthorized transactions on your credit card is identifying them as early as possible. Robert Siciliano, CSP, the Partner & Head of Training at Protect Now, told us:
“Keep a sharp eye on your credit card accounts. Read through the purchases for every monthly statement to see if any unfamiliar or odd items show up. Don’t just skip past small purchases; a charge for $9.95 could still be fraudulent. A crook knows you’re less likely to pay attention to small numbers. Consider checking your statements online weekly or even better, download your bank’s mobile app and check them daily.”
As a credit union, we love this advice. Addition Financial provides a full array of online and mobile banking tools to our members with the goal of making it easy to monitor your accounts and transactions. We want you to always know what’s happening with your credit cards.
When you review your statement, keep in mind that some companies may have a corporate name that appears on credit card statements that’s different from the name on a store or website. If you’re not sure about a transaction, Googling the name should help you clarify the situation and determine whether a charge is fraudulent.
Lock Your Credit Card
The next step is one you may be able to take and it represents the quickest way to prevent any additional unauthorized charges on your account. Alex Miller, the Founder & CEO of UpgradedPoints, told us:
“If the app you have for your credit card has a feature to lock the card, lock it.”
A lot of credit unions and banks offer a locking feature for both credit and debit cards. Our Addition Financial members can access a “Lock Card” feature simply by logging into our app. They can also dispute debit card transactions from the app.
The benefit of locking your card quickly is clear. Doing so will prevent anybody from using the card until you unlock it.
Contact Your Credit Union or Bank
Even if your credit union or bank offers a lock feature for your credit card, you will still need to contact them to report the unauthorized charges. This is an essential step and should be done as soon as possible.
Jacob Dayan, the Founder & CEO of Community Tax, says:
“If you notice any suspicious activity on your card, you should immediately call your credit card company and inform them of the suspected fraud. They will likely freeze your card for the time being.”
We would add that you should keep a list of phone numbers for each of your credit cards in a secure location in your home. That way, you won’t need to waste time searching for the right numbers to call.
Also, if your bank doesn’t offer an online or in-app option to lock your card, your phone call is what will ensure that your card is locked and prevent further unauthorized charges.
Freeze Your Credit
While it’s essential to lock your credit card to prevent anybody from using it, you also should be aware that your credit reports could be affected as well.
Under the Fair Credit Billing Act (FCBA) you have the right to freeze your credit reports at no charge. To do so, you will need to contact the three major credit bureaus. When you freeze your account, you will be given a PIN that you’ll need when you’re ready to “thaw” your accounts.
If you have enrolled in a credit lock program, you can choose that instead. Credit locks can be engaged online and they are easier to use than credit freezes. However, you will need to enroll in a separate program and Experian charges a monthly fee for theirs.
Lisa Torelli-Sauer, an editor at Sensible Digs, told us:
“Whichever option you choose, it’s important to ensure that all three credit reporting agencies – Equifax, Experian, and TransUnion – have been notified.”
We want to note that the timing of your reports to the credit bureaus is important. According to the FCBA, if you report fraudulent charges within two business days of when you learned about the loss, your liability will be limited to $50. However, if you delay reporting:
- You may be liable for up to $500 if you report longer than two business days after you learned about the loss but less than 60 days after your statement was sent to you.
- You may be liable for unlimited charges if you wait more than 60 days after your statement was sent to you.
If you suspect that your credit card has been used without authorization and call the credit bureaus before any charges appear, you will not be liable for any fraudulent charges at all.
Place a Fraud Alert on Your Account
When you are talking to the three main credit bureaus, you should also ask them to put a fraud alert on your account. This move may seem redundant when you have already put a freeze on your credit, but it’s a good idea when you know your credit has been compromised.
The benefit of the fraud alert is that it ensures that the bureaus will flag any activity on your account that seems suspicious. If you’re enrolled in a credit lock program, you may already receive notifications of suspicious activity.
Change Your Passwords and PINs
It is an unsettling thing to have your credit card be used without authorization. Even if your security hasn’t been compromised in other ways, you may want to take additional steps to get the peace of mind you need.
One thing we suggest is to change your credit card and bank passwords and PINs. It’s a good idea to change your passwords regularly even if your credit card hasn’t been stolen or used without your permission.
Ideally, you should be using secure passwords that include:
- Upper and lower case letters
- Numbers
- Symbols
It’s never a good idea to use personal information such as the names of your kids or pets or important dates such as birthdays and anniversaries. Using a password manager such as LastPass can help you generate secure passwords and store them easily.
Review Your Credit Reports
After you have reported everything and received confirmation that unauthorized charges have been removed, you should order a copy of your credit reports from all three bureaus and review them completely.
This is the perfect time to make sure that there isn’t any inaccurate information on your reports and take care of potential issues. Going forward, you’ll be confident that you have clean credit.
Secure Your New Card
It’s normal to feel vulnerable after someone steals your credit card. Fortunately, there are steps you can take to make fraud less likely in the future.
The first thing we suggest is using a mobile wallet for credit card payments. Mobile wallets such as Google Wallet and Apple Pay are free to download. They create an encrypted code each time you pay, so that even if someone gets the code they don’t have your credit card information. The code is a one-time use code, which means they can’t use it either.
The second option, if you don’t want to use a mobile wallet, is to sign up for a service that creates virtual credit card numbers. Some financial institutions offer this service or you can sign up online. You can generate as many virtual numbers as you want – even a new one for each transaction.
Finally, don’t shop online using a public or open Wi-Fi connection. If you must shop when using someone else’s connection, use a virtual private network (VPN) to prevent anybody from accessing your information.
Sign up for Alerts and Monitoring
Finally, you may want to consider signing up for a credit monitoring service. The service will track your credit and notify you of any suspicious activity.
Many credit unions and banks offer account alerts, too. You can sign up to receive alerts every time your credit card is used via text or email. That way, you’ll be aware of any transactions and can take early action if there’s something you didn’t authorize.
It can be stressful to experience credit card fraud but following the simple steps we have outlined here will limit your liability and minimize your risk of additional problems.
Need a credit card with convenient online tools and an app that allows you to lock the card? Click here to apply for an Addition Financial credit card today.
