Are Credit Card Companies Proactive In Investigating Suspicious Activities?

Yes, credit card companies take investigations seriously when there is suspicion of fraud. They go through a thorough process to gather information, assess the type of fraud, determine the extent of the monetary loss, and analyze how your credit card information was compromised. Once the investigation is complete, the credit card company will decide on the validity of the fraud claim. Fraud is a widespread issue that affects numerous consumers on a daily basis. Shockingly, around 151 million Americans have experienced fraud in their lifetime.¹ If you have fallen victim to credit card fraud, continue reading to understand the investigation process better and discover steps to safeguard yourself in the future.

Understanding Credit Card Fraud

Are you familiar with credit card fraud? It occurs when someone unlawfully uses your credit card information to make purchases without your knowledge or consent. Let’s break it down into two categories:

In-person Fraud

If someone physically takes your credit card, creates a fake one using your account details, or makes unauthorized transactions in a store, it is called in-person credit card fraud, also known as card-present fraud.

Remote Fraud

When your credit card information is used fraudulently for online shopping or any other kind of purchase without the card being physically present, it is referred to as remote fraud or card-not-present fraud.

Signs to Watch Out for Regarding Credit Card Fraud

We wanted to share with you some common signs that could indicate credit card fraud:

Sign to Look for	Potential Meaning
Unfamiliar Charges	Whether they’re small or large, any unusual activity on your account can be a cause for concern. Sometimes scammers make trial purchases with small amounts.
Missing Statements	If you haven’t been receiving your regular statements, it could indicate that someone has tampered with your account’s mailing information.
Calls from Debt Collectors	If you receive calls regarding debts for accounts you didn’t open, it’s a strong indication of fraudulent activity.
Unexpected Declines	If your card gets declined unexpectedly, it could be an indication of unauthorized use and that your credit limit has been maxed out.
Credit Inquiries	If you notice inquiries from unfamiliar lenders on your credit report, it could mean that someone is utilizing your identity without your knowledge.
Receiving Unsolicited Credit Cards	If you receive credit cards that you didn’t apply for, it’s a potential sign of identity theft.
Alerts from Your Card Issuer	Banks often monitor for fraudulent activity and might send alerts about suspicious actions on your account. Please don’t ignore these notifications.

How Credit Card Issuers Handle a Credit Card Fraud Investigation

If you come across any unauthorized credit card transactions, it’s important to promptly report them to your credit card issuer. Most credit card companies provide a special point of contact specifically designated to investigate unauthorized transactions. If this is not the case, you can reach out to their customer support phone number as usual. Once you’ve reported the unauthorized transaction, the credit card issuer will work closely with you to determine if a credit card fraud investigation is necessary. In order to initiate a fraud investigation after disputing specific transactions, credit card issuers must first confirm their fraudulent nature.

The Process of Fraud Investigation

Upon noticing a fraudulent charge or receiving a fraud claim, the credit card issuer will typically cancel your card for security purposes and send you a new one before commencing the fraud investigation. Some companies might even issue an immediate refund, but even if they don’t, you won’t be held responsible for the disputed transactions throughout the investigation. The bank’s fraud investigation process can take up to 90 days. During this period, the issuer may contact the merchant responsible for charging your card, as well as yourself, for additional details they might require. Both card issuers and merchants are vigilant against “friendly fraud,” which refers to situations where a cardholder makes a purchase and then disputes it as fraud when it wasn’t. According to the federal Fair Credit Billing Act (FCBA), victims of credit card fraud are liable for no more than $50 in fraudulent transactions. However, credit card companies such as American Express, Mastercard, Visa, and Discover go even further by limiting your liability to $0 for all consumer credit cards.

Can Credit Card Companies Help Me Prevent Fraud?

Preventing credit card fraud is crucial, and it’s good to know that credit card companies can provide you with helpful features to protect yourself. As a consumer, it’s wise to choose credit card issuers who stay updated with the latest preventative measures against fraud. When you’re deciding which credit card to apply for, keep an eye out for these fraud protection features:

EMV Chips

Most card issuers now use credit cards with EMV chips as the standard. These chips offer an extra layer of protection as compared to swiping the magnetic strip. However, keep in mind that scammers can still attach special devices to card readers and copy the card’s information, so be cautious.

Contactless Cards

Using a contactless credit card can be even safer than swiping the magnetic strip or inserting the EMV chip. With a contactless card, you can simply tap it against the reader or even use a mobile device with a digital wallet for transactions. Many popular credit cards from major issuers now regularly offer contactless payments.

Virtual Card Numbers

Some card issuers also provide the option to create virtual credit card numbers for shopping online. This way, you can keep your actual card details private and minimize the risk of fraud.

What to Do if You Are a Victim of Credit Card Fraud?

If you notice any suspicious activity on your debit or credit cards, it’s important to take immediate action if you suspect you are a victim of credit card or identity fraud. Here are some steps you can follow:

Contact Your Credit Card Issuer

The first thing you should do when you identify suspicious activity on your account is to get in touch with your credit card issuer. They have the ability to place a credit freeze on your card, safeguarding you from any further fraudulent charges. Once you report the fraud to them, they will assist you in disputing the charges through their consumer services department.

Lock Your Credit Report

Reach out to the credit bureaus to place a lock or freeze on all your credit reports. By locking your credit reports, you can protect your FICO score from unauthorized changes that do not reflect your creditworthiness. However, keep in mind that freezing your credit reports will also prevent new creditors from accessing your report, so remember to thaw the freeze when you apply for a new account.

Set Up a Fraud Alert on Your Credit Report

If you believe that a fraud alert will suffice, you can easily create one online and place it on your credit report. Experian provides a fraud center on their website that allows you to generate an alert, which they will then forward to the other two major credit bureaus. With a fraud alert, new creditors will still have access to your credit report but will be required to take additional steps to verify your identity before opening a new account in your name.

Report to the Federal Trade Commission

If you suspect that identity theft has occurred during the credit card fraud, it is crucial to report all the information you have to the Federal Trade Commission (FTC). By doing so, the FTC can conduct further investigations to ensure that you do not face any future negative consequences from the fraud. Moreover, reporting the incident may help the FTC identify the culprit or take preventive measures to stop similar scams from happening to others.

Helpful Tips for Using Credit Responsibly

In addition to knowing what to do in case of credit card fraud, there are other ways to manage your credit card wisely to maintain a healthy credit report and avoid overwhelming debt. Here are some friendly tips to develop a positive relationship with credit usage:

Regularly Check Your Free Credit Reports

Frequent monitoring of your credit report can help you identify errors early on and ensure that any incorrect information is not a result of fraudulent charges or identity theft. If you find any issues, you can easily dispute them with the three credit reporting bureaus.

Aim for Low Credit Utilization

Keep your credit utilization low at all times by comparing your available credit to your used credit. To maintain a good credit score, it is recommended to have a credit utilization rate of 30% or below. For even better results, consider paying off your credit card balance in full regularly.

Pay Off Your Outstanding Balances

If possible, try to pay off your entire credit card balances at the end of each month. By doing so, you can maintain a low credit utilization rate and save a significant amount of money on interest charges. Additionally, make sure to only use your credit up to the point where you can comfortably pay off the full balance at any given time, avoiding excessive credit card debt.

Keep Older Accounts Open

Before deciding to close an account you no longer wish to use, consider the consequences. Closing a credit card account can reduce your available credit and shorten your credit history, both of which are important factors in calculating your credit score. Instead, you can keep the account open for a while. If the issuer requires a balance, simply set up an automatic payment for a small bill with that credit card and schedule to pay off the balance right after.

Ensure On-Time Payments

Avoid making late payments for your credit cards and personal loans. Late payments can significantly affect your payment history, which accounts for 35% of your credit score. To never miss a payment deadline, set up automatic withdrawals from your checking account, so you can focus on other things while staying on schedule.

Frequently Asked Questions about Fraud Investigations

What happens to my account balance when I report credit card fraud? When you report credit card fraud, your credit card company will typically put a hold on the disputed amount. You won’t be responsible for paying for any unauthorized transactions while they investigate and resolve the issue. Can reporting credit card fraud affect my credit score? Reporting fraud should not directly impact your credit score. However, it is important to act quickly. As soon as you notice anything suspicious, inform your credit card company. They will initiate their fraud investigation process and unauthorized charges should not appear on your credit report. Are identity theft and credit card fraud the same thing? Identity theft involves someone using your personal information to impersonate you, sometimes even opening new credit card accounts in your name. Credit card fraud, on the other hand, refers to the unauthorized use of your existing account. How can I prevent credit card fraud in the first place? To prevent credit card fraud, closely monitor your account statements and consider setting up transaction alerts. It is important to catch any suspicious activity early. Be cautious when providing your card information both online and offline, and avoid using your credit card account on public Wi-Fi networks. What is the timeframe for reporting credit card fraud once I notice something suspicious? Most companies allow a 60-day window for reporting any suspicious activity with your account. However, it is best to report it as soon as possible. This allows the credit card company to start the fraud investigation promptly and gives you peace of mind knowing that it is being taken care of. If my card is lost or stolen, should I report it even if I don’t see any unauthorized charges? Absolutely! It is better to be safe than sorry. If your card is lost or stolen, report it immediately. Your credit card issuer will usually freeze your account to prevent potential fraud, including any future unauthorized transactions. Do I need to involve the authorities when I notice credit card fraud, or does my credit card company handle it all? Your credit card issuer should be your first point of contact as they have procedures in place to investigate fraud. However, if the situation escalates, such as in cases of identity theft or significant amounts of money involved, it may be wise to file a report with the police or even the Federal Trade Commission.

Important Information About Credit Card Fraud Investigations from Pachyy

Did you know that credit card issuers actually investigate fraud? If you have any questions about revolving credit accounts, we’re here to help! At Pachyy, we offer more than just online loans. We also provide valuable information online to help you better understand your finances. Check out our financial blog where you can learn about how often you should use a credit card, tips on avoiding credit card scams, and much more! For more details, you can refer to the following resources:

1. 2023 Credit Card Fraud Report | Security
2. How Do Credit Card Companies Investigate Fraud? | Experian