The risks of credit fraud and identity theft are always present. From phishing scams, to spyware and the lack of proper security implemented by companies that handle consumer personal information, the odds are against us. In 2009 there were over 400 security breaches reported to the FTC and in 2010 there are 17 so far. These breaches expose consumer information in volumes and each day more and more people are discovering that they’ve been victimized by an identity thief.

The number of threats consumers face today are astounding, what’s worse, once the scam takes place, the victim may not notice the theft until months later. So what can you do to ensure your personal information stays safe?

One of the first steps to get started is to monitor your credit report. Your personal credit files are kept by the 3 major credit bureaus in the US. The information they record include:

• The companies that granted you credit
• Third parties that have made credit inquiries about you
• Third parties that have reviewed your credit
• Payment and timeliness information (payment history)
• Past addresses for the last 10 years.
• Jobs you’ve held in the last 10 years

Guidelines for monitoring your credit:

Keeping track of your credit report and what appears on it regularly, will prove a huge benefit and a great way to stay ahead of identity thieves. Here are some guidelines to be most effective.

1. Check all 3 of your credit reports: You’ll find that there are significant gaps and differences in how your credit is seen by each of the major bureaus. A certain account might show in one but not the other, so it’s essential you compare information across all three reports.
2. Monitor your credit reports quarterly: You can check your credit free once a year, and although that’s better than nothing, it isn’t frequent enough to detect fraud and stop the damage. Checking your report once every quarter is the most ideal way to keep on top of what’s going on with your personal credit file and catch identity thieves and stop credit fraud before it becomes a bigger problem.
3. Look for suspicious activity: When reviewing your credit report you’ll notice and recognize accounts that are familiar to you, like your Visa card from Chase, or that car loan you’re still paying off. Your job is to take a close look at every single account reported on all 3 of your credit reports and find anything that looks suspicious or inconsistent when compared to your other reports. Look at inquiries made and find out who they are and why they’re inquiring about your when you have not recently applied for credit.

Keeping on top of it proactively and consistently is the most effective way to keep safe from credit fraud and other identity theft threats. However, it may seem a little inconvenient and time consuming, if this is you, consider credit monitoring services or full blown Identity Theft Protection services.

These automated systems will alert you automatically when changes to any of your credit reports occur, and depending on which service you sign up for, the coverage can be very sophisticated and certainly takes the burden of your hands.

Credit fraud is perhaps the most common form or identity theft and the easiest to commit. Every year millions of Americans and Europeans are victimized by scammers the world over. These savvy criminal/hackers are a tight circle and trade information constantly on online black markets, where hundreds of thousands of credit cards and social security numbers are found.

Credit card fraud can be prevented with the help of credit monitoring services, but for those who are not yet signed to these services, you have rights under the law if you become a victim or credit fraud.

1. First thing you must do is get a police report filled out. Many states won’t have a specific law for this, but you must be persistent, as this report will entitle you to the following:

• A 7 year fraud alert
• A credit freeze
• Have inaccurate or fraudulent data blocked from your credit reports
• Get copies of all transactions records on fraudulent accounts

2. You have the right to have those fraudulent accounts removed from your credit report once you have gathered the necessary evidence about the fraud, including any collections notices or inquiries.

How to organize your credit fraud case:

• Keep a detailed log of your time and efforts, including all phone calls you receive or make, including names of people you talk to, their titles, phone numbers, company name and notes about the conversation.
• Mail all correspondence certified with a return receipt requested to confirm it has been delivered. Keep the postcards you receive back as evidence.
• Get confirmation of all conversations and agreements in writing, people leave companies all the time and that person may not be around to see that agreement through.
• Maintain an expense log, where you record the time and money you’re investing into resolving your credit fraud case.

3. Work with the right people. You’ll waste a lot of time if you hire or talk to the wrong people about your case. Insist on speaking with someone on the fraud or investigative side of a company or government agency. Customer service is never the right place to start discussing your credit fraud problem.

If your case is beyond credit card fraud and it involves other aspects of your identity, check the resources listed on the Identity Theft Victims page.

Once your case is resolved and your credit report is back to a healthy status, consider a solid identity theft or credit monitoring service that can provide advanced credit fraud alerts to help you act quickly.

The scanning technology employed by some of these providers is outstanding, being able to detect subscriber information on illegal information trading sites is one of the best benefits of the service.

Credit card fraud adds up to billions of dollars every year, it is the most common form of identity theft and often the easiest for even the most novice identity thief to commit. Credit card scams have been around since the inception of the credit system and have evolved along side the level of sophistication of modern methods of credit protection. Consumer online activities create many opportunities for consumer fraud, and often, internet users do not realize the danger they’re in when they perform these transactions from an unprotected computer system, although this only occurs if the thieves are savvy enough.

How credit card fraud occurs

Credit fraud can occur online, particularly when a computer system is not protected with antivirus and spyware software that can keep malicious intrusions out. However, online credit fraud is not the main source of the crime, credit card fraud is facilitated to identity theft criminals mostly in the conventional ways. That is, while we run common transactions such as taking money out of the ATM, ordering a pizza over the phone, writing our credit card number on a bill etc. Other ways thieves are able to get direct information about your credit accounts is by redirecting your mail by submitting a change of address card to the post office.

Once a thief gets a hold of your mail, they may or may not use the same accounts you have active, if they have enough information on you, they may instead attempt to open a new account. But most often they’re looking for a credit card number they can use for online transactions. Your credit statements will often contain your credit card number and the expiration date, and although the CVV or CV2 (card verification value) number won’t appear on your statement, not all merchants require it to complete online orders.

Another method used for acquiring consumer information to commit credit fraud is known as “dumpster diving“. This is when thieves dig through your trash to find readable information they can use. This is still an effective method since probably “most” people don’t bother to shred paperwork that contains their personal information. Ripping up these documents does not always destroy the documents completely. Any information they find can be used to attack existing accounts or open up new ones.

Of course the easiest thing for a thief to do is steal the physical credit card. When your wallet or purse are lost or stolen thieves will act quickly to use the credit accounts to make purchases before you report the cards stolen. Carrying the phone numbers of the credit card companies in your wallet won’t do any good should your wallet disappear.

Even if you’re savvy enough to guard your own credit accounts, there are other ways that your account numbers can be exposed and that is through security breaches, which often means that companies you do business with failed to secure your information. This often happens when their computer systems are hacked or their employees commit the credit card fraud by either selling consumer account information or using it themselves.

Credit card fraud protection

Because credit fraud and credit card scams are rather a “when” and not an “if”, there are many ways to establish a fraud protection system to work for you. However, not all credit card fraud protection services work the same.

Your credit card company may extend this service for free depending on the type of account you have, although they typically are only concerned with protecting the credit card account you have with them and not all of your credit accounts, which can be ok if you only have one credit card. Fraud protection is in fact a big business and although it does cost extra in most cases, it is an absolute necessity, especially if the the credit account is very active.

Credit monitoring is one service that can monitor your credit accounts and your credit report, this type of service will alert you when suspicious activities occur on any of your accounts. The goal of this service is to alert you immediately so you can take action before further damage occurs. However, it can not prevent the credit fraud from happening.

Identity theft prevention services are perhaps the most effective means of protection against credit card fraud. These services were established with the intention of providing a complete system of protection that includes not only your credit card accounts but your social security number, and in some services, your medical benefits. This type of protection can in fact stop the fraud before it happens.

How to report credit card fraud

It’s important that if your wallet is lost or stolen you’re able to reach your credit providers and banks to report your cards missing and either suspend or cancel the accounts before they can be used. If you have noticed that your credit statements have stopped arriving to your mail box, or if you notice that there are charges on your credit accounts that you did not make, you must move immediately to report the credit fraud.

To learn how to report credit card fraud and any other type of identity theft, please follow the directions on our “reporting identity theft” article. There you’ll find all the details you need to get the process started.