How Does Card Fraud Happen

Bad Guy stealing Platinum Card

Card Fraud is the unauthorized use of a credit or debit card to fraudulently obtain money or goods. Credit or debit card numbers can be stolen from many places, such as unsecured websites, identity theft, merchant breaches/compromises or ATM and gas pump skimmers. The number of credit and debit cards exposed by hacking and/or compromise efforts at ATMs and merchants has jumped 70% in 2018 according to Fair Isaac Corporation (FICO).

When a credit or debit card experiences fraud, the credit union will take the loss and refund our member’s account once fraud paperwork has been completed and processed. Since credit unions are owned by their members, the fraud loss is truly everyone’s loss so we work hard to block or minimize the losses when possible. There is a very fine line between protecting members and the credit union from loss, while allowing cards to be used conveniently without restriction.

Although we follow fraud trends in hopes of staying ahead of the “bad guys”, card fraud is unpredictable which makes it difficult to fight. The introduction of the EMV Chip has helped to prevent fraud, but it only works if the merchant is EMV ready. Most Pay-at-the-Pump gas stations are not EMV enabled so this continues to be a vulnerable area for potential fraud. The chip is also not associated with internet based transactions, which leaves card information susceptible to compromise.

Prevent Fraud 

As stated before, gas stations continue to be a high risk because not all gas stations are EMV enabled as of yet so they are vulnerable to skimmers. Skimmers allow fraudsters to gather enough card information to create a duplicate card for your account that can be used to make purchases against your account. If possible, go inside the gas station to make your gas purchase because a transaction done inside with the cashier will be protected by the EMV Chip.

Consider only using a credit card to make internet purchases. Credit cards are just as vulnerable as debit cards in regards to internet fraud purchases, however experiencing fraud on your debit card affects your actual cash flow and can leave you shorthanded in your checking account while the fraud is being reported, processed and refunded. The credit union offers a Platinum Card or a Secured Card with great benefits like no annual fees, no balance transfer fees, no cash advance fees, no over limit fees and a free Reward Program.

The best tools you have to prevent and minimize fraud on your account remains, Online Banking and Card Alerts. Reviewing your account history frequently through online banking will help to ensure that you catch suspicious or unauthorized transactions. You are truly the only one who knows which transactions have been authorized. We also have a Risk Intelligence Department that may call you to verify purchases that seem suspicious and go against your normal spending habits so it is important to make sure that we have updated contact information for you. We also offer Card Alerts, which allow you to set parameters that correspond to your spending habits and can alert you to suspicious activity by email or text.

If you find that your account has become a victim of fraud, immediately contact MasterCard® at 1.800.449.7728 so the card can be blocked to prevent further fraudulent activity. Credit Card fraud will be managed by MasterCard®, while debit card fraud is processed by the credit union. You can visit our Card Department located next to the main branch in Lakewood or contact us directly at 303.234.1700 regarding debit card fraud and we will provide a form for you to complete and return.

It is important to keep in mind that any time you provide your card to a merchant or enter your card on a website to make a purchase, this transaction is authorized and cannot be considered fraud at later point of time. Some members have entered their card number for a free trial offer and then consider future transactions from this merchant as fraudulent transactions because they didn’t call to cancel the service or product after receiving the free offer. You can read more about the risks of trial offers here.