Hint: If you have the right credit card, then the battle is almost won.
I was eating sushi with my wife last week when I received a phone call from my bank’s fraud protection department. They asked me if I had spent $300 at bodybuilding.com earlier that day. While my wife probably would have been happy with that purchase, I was pretty certain that my credit card had been compromised.
No problem. I told the bank that it was not my purchase, so they did not charge me for the body building products and instead, issued me a new card to be delivered the very next day. During our conversation, the card representative also pointed out another suspicious charge on my card. It was a .93 cent charge to a company I had never heard of. He pointed out that this was the normal tactic for identity thieves. Once they steal your credit card information, they make a small purchase (that is usually less than one dollar) to see if the card works and to test whether or not the owner will notice. Then they make a bigger purchase after the card has been confirmed—i.e. body building products.
Situations like this happen thousands of times a day. 4% of Americans are victims of identity theft—that’s 1 in 25 people. On average it costs the victim $631 out of pocket, and requires 33 hours of work to resolve. There are stories that are far worse than mine. People have found that mortgages have been signed in their name or bank accounts have been opened and then over-drafted.
Identity Thieves Have Many Tools
With so much of our lives now online, it is much easier for identity thieves to piece together a complete picture of their victim after an initial theft. In other words, if a thief steals your credit card number, they can probably gather the rest of your information through easy-to-use public websites. Moreover, thieves are becoming increasingly savvy in their use of technology.
You can have your credit card information stolen in a number of surprising ways:
1. Over social networks
2. While shopping online
3. Through public Wi-Fi networks
4. With a hidden scanner in public areas or on someone’s person
5. Through the contents of stolen mail
6. From details gathered from your trash
All of these methods have been used. Your best bet is to take action prior to ever having your information stolen. Below are some preventative steps you can take.
FRAUD PREVENTION TIPS
1. Check Your Credit Card Bill Regularly
If you don’t receive paper statements, check your bill online at least once a month. I tend to check my credit card statement weekly even if it is just a glance. Also, manually pull your credit at least once a year. You can do this for free through AnnualCreditReport.com.
This is important because the longer identity theft and fraud goes undetected, the more likely the odds that you will have to pay for it. Every major credit card company and major bank will have a robust fraud detection department. They will monitor odd transactions and out of state purchases. I have been very impressed with my American Express, Chase, and Wells Fargo cards. They have each contacted me immediately when a purchase seemed out of the ordinary (like earlier this year when I traveled through Germany, Austria, and the Czech Republic on the same day, purchasing gas in each country).
2. Credit Monitoring
We have mixed feelings about credit monitoring at CreditSense.com. Some credit and identity monitoring services are complete scams. Many offer very little value, and most of them are rather expensive. For the most part, the free service that comes with any major credit card should suffice.
3. Use a Smart Card
Most cards offer zero liability protection. Still, identity fraud can be a major hassle. In my case, after a new card was issued, I had to call every company that I have set up on auto-pay. This was a waste of an afternoon to call every utility company, service provider, etc. just to update my credit card information.
Many new credit cards are embedded with a microchip that has stronger protection than the traditional magnetic strip located on all credit cards. Smart cards require a cardholder’s unique PIN instead of just a signature. This is a significant improvement over normal credit cards, because even if your credit card number or actual card is stolen, it cannot be used without the PIN.
4. Secure Your Smart Phone
Smart phones are great for so many reasons—yet most people store most of their personal data on their phones for ease of access and use. If your phone is stolen, someone could have immediate access to all of your stored data. If you use mobile banking or any other financial apps, you are at risk for having very sensitive information accessed by the thief. Moreover, phones can now even be hacked over public Wi-Fi just like any computer. Here are a few steps you can take to secure your phone:
· Use a service like “find my phone” that will enable you to track your phone if it is lost or stolen. You will then be able to remotely lock and possibly erase your phone and send the new owner a text message informing them that they are now the owner of a useless phone.
· Turn off your Bluetooth if you are not using it. This not only saves battery life, but more importantly, it protects your phone from being connected to anyone else’s Bluetooth device. Scoundrels can pair their device to your phone and hack into your data.
· Be careful using public Wi-Fi networks. Try to only use private networks that require a password.
· Use a password to protect your phone. Set your phone on auto lock so that it locks after a set period of inactivity. You can also password protect any apps that store sensitive data like financial apps or shopping apps.
· Don’t download anything that doesn’t come from a reputable site or publisher. Check sites like appwatchdog.com for complaints and reviews.
None of these precautions are guarantees to protect you. Credit card fraud and identity theft are a 37 Billion Dollar a Year Business. The thieves are savvy and their methods change daily.
If you think your credit card has been compromised, check the Department of Homeland Security’s website for a list of steps to take.