It is not uncommon for people to confuse identity theft and credit card fraud, or to think they are one-in-the-same. The fact is, they aren’t and understanding the difference is essential to fully understand the seriousness of each issue.
When you get to know the basics and how you can protect yourself, you will minimize the chances of becoming a victim of either of these crimes.
The Basics of Credit Card Fraud
Credit card fraud is considered to be a type of identity theft. When this occurs, a thief has actually stolen your credit card information and then makes a purchase online or in a store.
The majority of credit card companies have a liability limit of just $50. This means, if someone steals your card and charges thousands of dollars on it, you will only (likely) have to pay $50 of the balance. In most cases, however, the credit card company will remove any charges that resulted from fraud.
The Basics of Identity Theft
On the other hand, identity theft involves more than just a few, or several, fraudulent charges. An identity thief can steal all of your personal information and use this to open new lines of credit, obtain a false ID with your name and open new credit cards.
Unlike with credit card fraud, there is no type of liability limit in this situation. What this means is that you may wind up having to pay for all the damage that is created or caused by someone who stole your identity.
Tracking Down the Credit Card Thief
In many cases, credit card fraud can be caught early on. If you have the proper type of protection in place, such as credit monitoring, you will be alerted as soon as the suspicious activity is detected. In some cases, credit card companies themselves will let you know if something that looks suspicious in regard to your card is going on.
For example, if you live in Florida, but there are several charges on your card in Boston, a credit card company may freeze the account until they are able to verify it is really you making the charges. This is quite beneficial and protects you from fraudulent activity.
It is important to remember that credit card theft may occur when a wallet is stolen or lost, but it may also occur if your information is taken without you giving permission. This can occur online with an unsecured site, in a retail store or restaurant or even while the card is in your wallet.
Finding an Identity Thief
An identity thief will take on a number of other forms. Some may decide to pose as you in hopes of visiting the emergency room and receive “free” healthcare while others may use all your personal information to open new credit lines.
The fact is, the methods used by these types of identity thieves are quite sophisticated and can go much further than someone just attempting to pay for something with a stolen credit card. In many cases, it is nearly impossible to catch them early on, leaving you with quite a mess in the long-run.
If they pose as you with fake IDs and purchase alcohol for minors, it may be you that is facing issues with this, rather than them. This is the whole reason identity thieves do this, to minimize the trouble for themselves. They use sophisticated methods that are hard to catch, which is why it is so important to protect yourself ahead of time.
The Impact of Credit Card and Identity Theft
A huge difference between identity theft and credit card fraud is the impact they have. When someone steals your credit card number, they will be able to max out that one account and perhaps even open other credit cards in your name. However, there are quite a few protective elements in place in the industry to help and limit the damage that these types of actions create.
However, if you are a victim of identity theft, the impact can be much more devastating. In fact, this type of activity can impact you for years and in some cases even decades. With some varieties of identity theft, including medical identity theft, you may not even discover you are a victim until the collection agencies begin to call.
When the situation reaches this point, the issue may be so embedded in a person’s personal records that it will feel like a part-time job just trying to clear your name. You will not only have to handle the bills that are in collection, but also deal with lenders, credit bureaus and, in some cases, law enforcement offices.
There is no question that both situations can be stressful and draining. Knowing the signs of an issue and paying attention to messages from lenders or credit card companies is the best way to reduce the severity of the issue that you are facing.
Put Safeguards in Place Now
The bottom line is that you need to take steps now to safeguard yourself and your information from identity theft and credit card fraud. If you receive an alert from a credit card company, it may be an early signal that your information is compromised. Be sure that you have put safeguards in place to protect yourself, your financial situation and your assets.
Some tips you can implement today include:
- Never give your Social Security number to anyone.
- Remember your passwords, don’t write them down and take them with you.
- Be sure no one is watching when you use an ATM machine.
- When buying something from an auction online, attempt to pay the seller directly with a credit card. This allows you to dispute the charges if the item never arrives or is damaged.
- Be skeptical always.
- Be sure your children know not to give out personal information.
Taking the time to learn how to safeguard your information will help to reduce the chances you will be a victim of credit card fraud or identity theft.