5 Debit and Credit Card Scams and How to Avoid Them
Where would we be without our credit and debit cards? The presence of COVID-19 has fueled a new era for credit card users, who depend on them for online shopping, charitable giving, and even their contactless functionality, conferring hygienic benefits over cold, hard cash. But the increased use of debit and credit cards has also triggered a rise in card-based scams, with criminals continually looking for new ways to gain access to your credentials.
Statistics from the Federal Trade Commission’s Consumer Sentinel Network indicate credit card fraud is on the rise, as evidenced by an 89% increase in the number of fraud reports filed with the agency during the first two quarters of 2020, compared with the same period in 2019.
Along with this rise is the increasing variety in the ways credit card scammers are gaining access to consumers’ banking and credit card accounts. Here are five of the most common ploys and tips on how to avoid them.
1. The Promise of Lower Interest Rates
In this scam, tricksters try to appeal to consumers with promises of lower credit card interest rates. It usually begins with a prerecorded phone call saying you’re qualified to join a program that will help to negotiate a lower rate on your behalf. To get in on the deal, you join the program and pay a fee. The criminals request your personal information, including your credit card number.
Sometimes the scammers do contact your credit card company and attempt to negotiate a lower interest rate; other times they don’t. Either way, the scammers win when they’re able to rack up charges on your card.
Avoid this scam:
- Know that using third-party entities to negotiate lower credit card rates is not how it’s done. So, if you do receive a robocall offering this service, hang up.
- Never give out sensitive personal information to unexpected callers. When you initiate an interaction with KeyBank, we may ask for your information, such as the last four digits of your Social Security number, login ID, or a one-time passcode to verify your identity. However, be cautious of unexpected requests by phone, text, or email for your full Social Security number, login ID, or other personal information when the communication was not initiated by you. Verify these requests by contacting a known KeyBank resource (e.g., a local branch, 1-800KEY2YOU®) before providing any sensitive information.
- Reduce the number of unsolicited phone calls you receive by listing your number on the National Do Not Call Registry.
2. Overcharged and Fraudulent Purchases
You receive a phone call or text alerting you to unauthorized or fraudulent charges on your debit or credit card, or that you may have been overcharged. To fix the problem, the caller may also request your card information or the three-digit code to remove charges or rerun the transaction.
Occasionally, the caller may also try to prove they’re legitimate by sharing information they already have about you — such as your name, address or account number. If you supply those details, the crooks can gain access to your account.
Avoid this scam:
- Don’t provide debit or credit card information to these callers. While it’s possible that fraudulent charges on your account may prompt a phone call, text message or email from your creditor, that caller won’t ask you to answer personal questions. Verify the issue exists by contacting your debit or credit card company using the phone number on your card.
- Monitor your credit card activity regularly by logging in to your account online, or by using a smartphone app. You may also want to sign up to receive automated text notifications – if offered by your financial institution – to quickly alert you of particular account situations, such as transactions over a certain value or whenever your account balance goes below a specified level. And, if you see charges you don’t recognize, alert the issuer immediately to place a block on your account, dispute unauthorized charges, and request a new credit card.
3. Requests for Charity Assistance
Some scammers pose as charity organizations to steal funds from unsuspecting people who believe they’re helping a worthy cause. These criminals may call or email you requesting donations to benefit the victims of a recent national disaster or tragedy. At the same time, legitimate charity organizations may also be working to raise funds. Because of the timing or the existence of a relevant need, the scammers’ validity may not be scrutinized.
Avoid this scam:
- Don’t give out credit card details without first vetting the organization, and then contacting it yourself. If you want to support the victims of a tragedy with financial support, it’s best to research and contact charitable organizations directly.
- Vet charities that contact you by performing a Google search or by using a service such as the IRS’ Tax-Exempt Organization Search or Charity Navigator. When receiving calls requesting donations, also make a note of the number calling you. Google that number, placing quotation marks around it when searching, to look for online reports that the number has been implicated as part of a scam.
4. Skimming, Shimming, and E-Skimming
In the classic skimming scam, thieves place devices around or within card readers to steal sensitive information from the card’s magnetic strip when swiped. Skimming refers to devices placed around or on top of card readers, while shimming refers to the paper-thin devices designed to steal information from chip readers.
Common skimmer locations include card readers in locations that aren’t well lit or regularly monitored, such as gas pumps or outdoor ATMs. While the use of chip-enabled credit cards is intended to minimize skimming, these cards usually have magnetic strips too, and may be susceptible to skimming if the strip is used.
Meanwhile, shimming devices, installed in chip readers, may allow criminals to harvest enough information to create magnetic-strip copies of chip-based cards. These cloned cards won’t always work, but may be accepted by some retailers if they haven’t sufficiently updated their payment-capture technologies.
Yet another version of this scam, e-skimming, was recently highlighted by the Better Business Bureau (BBB). In this ploy, which occurs in online transactions, hackers install malware onto an online business’ payments server to collect information during the online checkout process. According to the BBB, you may not even become aware that your information has been stolen until either your card is used fraudulently or the company discovers the breach and alerts its customers.
Avoid this scam:
- Avoid sliding your card in a reader that has any of the telltale signs of skimming. These include a card reader that looks different from others at the same location, a reader that appears loose or tampered with, or a reader with additional devices attached near the card slot.
- Pay for transactions using a chip card’s tap feature, a smartphone wallet app or contactless payments in transactions that allow this form of payment. KeyBank, like other financial institutions, offers debit and credit cards with contactless or “tap” functionality. Many debit and credit cards also can be loaded into various smartphone wallet apps for use in contactless transactions.
- Consider using an online payment system, such as Google Pay or PayPal, when possible, so you don’t have to disclose your credit card information.
- Monitor your credit card transaction history regularly to confirm all charges and spot suspicious activity quickly.
5. Card Cracking
An emerging scam, referred to as “card cracking,” is luring account holders to disclose credit and debit card details to trick them into receiving fake deposits that end up as withdrawals. The Federal Trade Commission (FTC) reports that some scammers even actively promote card cracking as a way to make money with no risk.
Card cracking takes many forms. One common approach starts with a contest or giveaway, sometimes leveraging a current event or popular celebrity to add legitimacy. At some point, the victim is asked for their bank account, card, or other banking information as a condition of receiving the nonexistent prize.
Once they have this information, the fraudsters will deposit funds, usually in the form of counterfeit or altered checks, typically through mobile deposit, then withdraw the funds as quickly as possible before the bank is able to determine the checks are fraudulent.
A second version of this scam involves a social media post, website, or even a video, typically targeting college students or other young people, promising “quick cash.” With this version, the victim is asked to hand over their physical debit card or debit card number, PIN, and/or online banking information to the fraudster, in exchange for a cut of the funds. The fraudster may ask the victim to open a new, “free” checking account with a specific bank, and will then perform transactions as above — fraudulent check deposits followed by quick withdrawals.
The criminal typically guarantees that the victim will not be liable for any of the activity. They may even advise the victim to report the activity as fraudulent after the withdrawals are completed. Unfortunately, this is a false claim, and the victim will end up responsible for the returned checks and any negative balance in their accounts as a result of the activity.
Avoid this scam:
- Never give your card or card information to anyone offering you quick cash. If you allow someone else to use your card, you may be liable for activity they perform, whether or not you specifically authorized it.
- Never open an account in your name for another person to use. You are responsible for activity performed on an account in your name, even if you opened it for another person to use.
If you do become a victim of a credit or debit card scam or suspect that you have, report it immediately to your local authorities, the FBI Internet Crime Complaint Center (IC3) and/or the Federal Trade Commission (FTC).