Credit card fraud is the use of your credit card details by an unauthorised person. For example, someone could make a copy of your credit card details and use them over the phone or online to make purchases. Fraudsters can also trick people in to giving their credit card details by pretending there is an official reason for the card details to be shared (e.g. pretending to be calling from a bank or charity).
Another security issue arises with contactless or ‘tap-and-go’ payment technology. If you lose your card, another person finding it can make numerous transactions under $100 (which don't require your signature or PIN) before you find out.
What is fraud protection?
Fraud protection (also sometimes known as ‘zero liability policy’) is a type of safeguard for credit card users against theft and fraud related to their cards. If your card is used in an unauthorised, fraudulent or illegal transaction that you had no knowledge of, your credit card issuer will reimburse you for the money spent fraudulently in your name, and won’t hold you responsible. It’s like a type of insurance for your credit. You’ll need to get in touch with the card issuer as soon as possible, but the process takes time and the missing money will be unavailable while you’re waiting for it to be resolved.
Fraud protection should cover unauthorised transactions made in-store using the physical card, over the telephone using the card number and CVV, via online shopping, and contactless payments made with a smartphone or mobile device.
This sort of fraud protection is one of the significant benefits of using a credit card over cash. Different credit card issuers will have slightly different policies when it comes to fraud protection, so you should ask about the specifics of your card’s policy in order to avoid being caught out.
Other fraud protections
Some credit cards have round-the-clock security that monitors your spending patterns. Then, if the company identifies a transaction as suspect or unusual, it will try to get in touch with you to make sure it’s actually you making the transaction. If the company can’t reach you, it may decide to block your account until you can confirm it.
Credit cards may also have embedded security microchips that make it harder for credit card details to be fraudulently copied. When a chipped card is used to purchase, the transaction does not contain any data that can be used to counterfeit a chip or conduct an unauthorised chip transaction by reusing the data.
One factor common in all fraud protection schemes, however, is that you need to take as much care as possible in protecting your credit card by:
- Being vigilant in safeguarding your card
- Immediately notifying your card issuer if you discover the loss, theft or unauthorised use of your card
Like any insurance, if you are reckless with your credit card or do something that increases the risk of fraud, you may invalidate the protection.