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Credit Card Identity Theft—How It Works and Tips To Stay Safe


Credit Card Identity Theft—How It Works and Tips To Stay Safe


The United States has seen a surge in credit card identity theft cases, with millions of individuals falling victim each year. According to the Federal Trade Commission (FTC), 842,000 cases of identity theft were reported in the first three quarters of 2024, and credit card fraud was the most common type of identity theft reported within this period. 

With the rising rate of credit card identity theft in the U.S., understanding how it works and what you can do to protect yourself is crucial to avoiding its dire repercussions. In this article, we explore tips and solutions for the safety of your finances and, more importantly, your identity.

What Is Credit Card Identity Theft?

Credit card identity theft occurs when a criminal steals your credit card information and uses your identity to commit other crimes. These crimes include creating fake accounts or profiles in your name, receiving your tax rebates, committing employment identity theft, and more.

The criminals aim to steal sensitive information, including:

  • Social Security number (SSN)
  • Credit card numbers
  • Address and date of birth 

Tell-Tale Signs of Credit Card Identity Theft

Here’s how to tell if your credit card information and identity have been stolen:

  • You receive items you didn’t purchase—Fraudsters often forget to change the shipping address when they use your card for payments. If you receive a strange package you never ordered, your identity may be stolen
  • You’re asked to repay debts for accounts you didn’t open—You may receive calls from creditors or debt collectors asking you about outstanding debts on accounts you didn’t open
  • Your loan application gets denied—Your credit card company may reject your application for a loan because of outstanding debts on your account that were made in your name by an identity thief
  • Your financial statements indicate suspicious activity—You could spot multiple small unauthorized transactions or purchases you didn’t make when you review your account statement

How Credit Card Identity Theft Happens

Fraudsters steal your credit card information using various methods that potentially lead to identity theft. See a detailed explanation of how this occurs in the table below: 

Theft MethodHow It Happens
Physical theftA criminal pickpockets your wallet or snatches your card in public. Credit card fraudsters could also pick up a lost card for personal use or to sell on the dark web
Dumpster divingCriminals search through dumpsters for credit cards and other financial-related documents. If you don’t shred your cards or statements before disposal, they could access and use the details on them
Friendly theftA family member or friend could use your card details without your permission
Card skimmingFraudsters attach small devices called card skimmers to an ATM, gas pump, or POS device to steal data from your credit card’s magnetic strip
Data breach (hacking, Wi-Fi interception, etc.)Bad actors hack into payment systems for online stores and steal saved credit card information from the site. They could also intercept your transaction and steal your data when you make payments with public Wi-Fi 
Phishing (emails, texts, phone calls)Criminals may try to scam you and collect your credit card information over the phone or via emails and texts. They pretend to be a familiar entity to gain your trust easily
Shoulder surfingA fraudster peeks over your shoulder when you’re using an ATM or paying for items in a store and captures the information on your card

Does Credit Card Fraud Mean Identity Theft? 

No, it doesn’t. Identity theft is a broader term encompassing any fraudulent activity where someone uses your personal information (including your financial information) without your permission. 

Unauthorized charges often ensue after identity theft has occurred. The thief uses your credit card information to buy items, open a new line of credit, apply for a new credit card, obtain a false ID in your name, or commit other fraudulent activities.

The Difference Between Identity Theft and Credit Card Fraud

The table below gives a clearer picture of how identity theft differs from credit card fraud:

Identity TheftCredit Card Fraud
Theft of personal information to assume someone’s identityThe unauthorized use of credit card information for personal gain
The fraudster steals a broader range of the victim’s personal information, including SSN, DOB, address, etc.The fraudster relies on financial information like card number, expiration date, and CVV to commit fraud
It’s a broader category of crime that includes credit card fraudIt is a type of identity theft

How To Protect Yourself From Credit Card Information Theft

Taking steps to protect your credit card information can help you prevent credit card identity theft. Here’s what you can do to stay one step ahead of the fraudsters:

  1. Secure documents that have your details
  2. Never give out your credit card information
  3. Review your account statements frequently
  4. Set up measures to protect your information from strangers
  5. Be extra cautious when using your credit card online or offline

Secure Documents That Have Your Details

Keep financial records and documents in a secure location, out of reach of bad actors. If you must dispose of such documents, shred or burn them before you throw them away. Never leave your financial documents in the mailbox overnight. If you’re away from home for a longer period, request to pause mail delivery at your local post office.

Never Give Out Your Credit Card Information

Do not share your credit card number, CVV code, expiration date, or PIN with friends or family. A representative from your bank or credit card company will never request this information, either. Never give it to anyone claiming to be from such organizations. Instead, report fraud attempts to the organization immediately.

Review Your Account Statements Frequently

Quickly detecting fraudulent activity on your account can help to mitigate potential damages. Frequently go through your account statements to spot unauthorized transactions, both failed and successful ones. Immediately report any suspicious activity to your card issuer. 

Set Up Measures To Protect Your Information From Strangers

Use a strong password for your online credit card account to prevent fraudsters from breaching your account. Set up multi factor authentication, if your account offers it, to add an extra layer of security to your account. This will keep fraudsters out, even if they have your login information.

Be Extra Cautious When Using Your Credit Card Online or Offline

If you’re using your credit card in public, be cautious to ensure no one is watching or capturing your information. Look for signs that an ATM or POS has been tampered with, such as loosely hanging card slots, and never insert your card in them. 

When making online purchases on a website, look for safety indicators like URLs with “https” instead of “http” or the padlock symbol beside the address bar. These indicate that a site is safe enough to input your card details.

What To Do if Credit Card Identity Theft Occurs

If credit card identity theft occurs, here’s what you can do to recover your identity and secure your funds:

  1. Contact the FTC—Report the credit card identity theft to the Federal Trade Commission by visiting the official website or calling 1-877-438-4338. Take the recommended steps to repair the damage as well
  2. Report to credit bureaus—Contact the three major consumer credit bureaus and request that a fraud alert and credit freeze be placed on your account 
  3. Report to other relevant parties—Inform your credit card issuer, bank, and your local police’s fraud department so that they can begin an investigation and start the process of recouping your funds

Keep your funds safe—If a credit card fraudster has access to your card information, your other financial accounts are vulnerable to a breach.

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