Credit card fraud: What to do if you're a victim

October 04, 2010

By Barbara Marquand | Money Rates Columnist

It's one thing to open your credit card bill and get sticker shock when you see how much your charges added up to in the last month. It's quite another to discover that you didn't authorize the transactions.

The Federal Trade Commission estimates that each year some nine million Americans are victims of identity theft, which includes credit card fraud.

Here's four steps to take if someone runs up fraudulent charges on your card.

1. Call your credit card company right away

The sooner you report the problem, the faster your credit card company can stop thieves in their tracks. Federal law limits liability for unauthorized charges on credit cards to no more than $50 per account, but many issuers have zero liability policies as long as you report the problem quickly. Call your credit card company's customer service number as soon as you detect the problem so that the company can change your account number and issue you a new card to prevent scammers from running up more charges.

2. Check your credit reports

It's a good idea to review your credit reports every year to check for mistakes or fraud, particularly after someone compromises your credit card account. Under federal law, you're entitled to free copies of your reports once a year from each of the three credit reporting bureaus. Follow the instructions to get copies at AnnualCreditReport.com.

3. Place a fraud alert on your credit reports

Contact the financial institutions involved and the credit reporting bureau if you find that phony credit card or other accounts have been opened in your name. Then ask a credit reporting bureau to place a fraud alert on your report. By law, that bureau must contact the other credit reporting agencies to do the same. Fraud alerts let creditors know that they must verify your identity whenever someone, including you, applies for credit.

Request an initial 90-day alert if your credit card has been stolen or you suspect someone has gotten ahold of your personal or financial information and that you're in danger of becoming a victim of identity theft. Consider an extended alert if someone has already opened up phony accounts in your name. The extended alert stays on your credit reports for seven years, and your name is removed from marketing lists for pre-approved credit offers for five years.

4. Monitor your credit card accounts closely

Sign up for free transaction alert services offered by your credit card issuers to let you know by e-mail or text messaging when there's unusual activity on your credit card accounts. Don't wait until the bill arrives in the mail or your monthly credit card statement appears in your e-mail inbox to review your credit card activity. Check your account periodically online and compare amounts with receipts.

Meanwhile, guard your credit card number from prying eyes. Don't give it up in response to unsolicited e-mails or telephone calls, and destroy any receipts or mail containing your card number before throwing them away.

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