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What to do if you detect fraud on your credit card?

Vidhu Bajaj avatar
Vidhu Bajaj
- 6 min read
What to do if you detect fraud on your credit card?

It’s very important to closely monitor your finances, especially your credit card activity, so you can detect any unusual activity or changes. With more and more people shopping online, there is an increased risk of your card details falling into the wrong hands.

Many Australians, unfortunately, are victims of some form of credit card fraud, especially when transacting online and a ‘card not present’ (CNP) situation occurs. If you find any unusual activity, receive a call or text message related to credit card activity that seems suspicious, contact your card issuer immediately.

What should you do if you find any unusual credit card activity?

If you notice some unusual or suspicious activity on your credit card statement or account, you may be wondering what to do. You should immediately contact your credit card provider and advise them of the situation to ensure your account is put on hold to prevent further unwanted activity. 

They will then investigate the transactions you’ve flagged as suspicious. The investigation will include checking that you have adequately protected the PIN and card against any fraudulent transactions. The card issuer may reimburse your account for the amount if you aren’t responsible for the loss.

Most credit card companies have systems that can pick up suspicious transactions before you do and will contact you via phone or SMS if they notice any unusual activity. However, be aware that scammers are using similar-looking texts or calls to defraud the customers. If you receive a text, call your card issuer rather than clicking any links. If you receive a call, call them back on their official contact number. This way, you can confirm with your card issuer using their official contact details that they contacted you.

You should also consider requesting a copy of your credit report, which you can access for free once every three months from the credit reporting agencies' websites. This can help you check for errors or strange behaviour, which could indicate someone has fraudulently used your name or identity to apply for any credit facility.

If your credit card is compromised, you should report the credit card fraud to the Australian Competition and Consumer Commission (ACCC) by calling 1300 300 630. Check with your card issuer, as they may do this on your behalf. You can also contact the Australian Federal Police national switchboard on 02 5126 0000 to find out if you should report the fraud to them.

What protections do credit card companies offer against credit card fraud?

Most credit cards have a zero liability insurance policy, which means you aren’t responsible for any unauthorised transactions on your account. These policies protect you as long as you immediately report the fraud to the credit card company and have taken sufficient care to protect your card and PIN from being stolen. 

To ensure the credit card fraud can be traced and nullify its effects, it’s essential to notify your credit card issuer as soon as possible if this has occurred to you.

Common types of credit card fraud

Unfortunately, there are many types of credit card fraud that you can fall prey to. The four most common types of credit card fraud are:

‘Card not present’ (CNP) frauds

‘Card not present’ (CNP) frauds are becoming more common as more Australians adapt to online shopping or using their credit card over the phone. These situations don’t require a physical card, signature, or PIN. CNP frauds occur when the person committing the fraud has gained access to the card number, three-digit security code, and the cardholder's name and address. 

Since the merchant does not handle the physical card, there is no opportunity of verifying the signature or asking for additional information. Most frauds are related to CNP, so ensuring your card issuer has a strong credit card fraud detection system to prevent such situations is essential.

Application fraud

Application fraud occurs when someone else applies for a card under your name, using your personal details and then uses the card. It most often happens along with identity theft because the fraudsters would need sufficient documentation to receive approval of the credit card application in your name.

Counterfeit card fraud

Counterfeit card fraud is when your credit card details are stolen, and your card details are used to make a counterfeit card. This card is then used for making purchases. Your card details are typically procured via skimming, where a reader is placed on an ATM or EFTPOS machine to steal credit card information. In some cases, your details may be sold or purchased from the black market.

Not received fraud

Not received fraud occurs when someone else gets access to your credit card before you. For example, it may be taken out of your mailbox when you apply for a new card, and it’s posted to you.

Tips to avoid credit card fraud

The same digital and technical advancement that has seen a rise in credit card fraud has also made credit card fraud detection easier. However, it’s best to avoid falling prey to fraud in the first place rather than detecting one after the fact. 

Here are some tips to help you avoid credit card fraud:

  • Memorise your PIN instead of writing it down somewhere or keeping it saved on your phone. Ensure you don’t use the same PIN for multiple cards. Also, choose a PIN that is difficult for others to guess, i.e. no birthdays.

  • Never provide the card number and other details unless you are securely checking out. Do not provide these details to telemarketers or strangers and be cautious with who you share these details with. 

  • Check your credit card statement as soon as you receive it and report any anomaly immediately to your credit card issuer.

  • Do your online shopping only on secure websites with a padlock or key symbol in the browser’s address bar.

  • If you apply for a new card, keep track of when it’s meant to arrive. If you’re concerned it may be stolen, ask for it to be sent to a branch (if it’s through a bank) or local post office rather than your home.

  • Ensure your mailbox is secure and only accessible to you and the postman.

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Product database updated 16 Jun, 2024

This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.