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The U.S. is awash in credit card scams, with the U.S. Federal Trade Commission reporting $8.8 billion lost by consumers due to fraud in 2022. Credit cards were the top payment method used in 2.3 million cases.
Diligence goes a long way in preventing credit card fraud. The best thing you can do to avoid becoming a victim is to empower yourself with information. Here’s how to identify 11 top scams and how to respond.
1. Identity theft and identity fraud
How to spot it
A thief will contact you directly, impersonating someone else to persuade you to release sensitive information about your identity that will give them access to your credit cards. Texts, phone calls, and emails from unrecognized senders (especially if they reach out incessantly after you fail to respond) signal that you’re targeted by scammers. Identity theft is stealing this information and identity fraud is using that information to steal from you—or from, say, a government program like Medicare using your information.
Identity theft can also happen when your information is stolen from a database. For example, in June 2023 3.5 million records including personal information were stolen from the Oregon Dept. of Transportation.
How to prevent it
Preventing an identity theft scam is pretty simple: Don’t provide any sensitive information—such as your Social Security number (SSN), credit card number, or bank account routing number—unless you initiated the interaction.
This rule can be hard to follow, because some scammers can be extremely convincing. For additional safety, consider buying identity theft protection. Services such as Identity Guard defend against identity fraud by giving you $1 million in identity theft insurance, data breach notifications, dark web monitoring, and more. You can even pay to have monitoring for all three credit bureaus, meaning if something shady pops up on your credit report, you’ll know about it.
2. Skimming scam
How to spot it
Credit card skimmers are accessories placed on point-of-sale devices to steal your payment information. They’re designed to resemble the real credit card terminal so you won’t suspect a thing during the transaction. Once you insert your card, the skimmer copies your credit card info as the merchant processes your payment.
Skimmers can be as simple as an extension of the magnetic stripe reader and as intricate as a false shell that fits over the PIN pad of a credit card machine. They’re most often found at gas stations and ATMs.
How to prevent it
The easiest way to discern a skimmer is to yank different parts of the credit card terminal around a bit. Official equipment will be sturdy, but skimmers can be removed with relative ease. If anything seems loose, or if the PIN pad buttons are difficult to press, be suspicious.
You can also compare your credit card machine with others in the general vicinity. For example, if you’re at a gas pump and something doesn’t look or feel right, take a look at the credit card slots on neighboring pumps to see if there’s a difference. The odds that there’s a skimmer at every pump is infinitesimal, unless the owner is in on the scam (which unfortunately does happen).
Technology can also help you out. For example, Skim Reaper is a card that you can insert into the point-of-sale terminal to detect if your credit card is being read more than once. If it’s not, then go ahead and use your card.
3. Phishing scam
How to spot it
Phishing is the act of sending messages (usually email or text) to trick you into either sharing personal information or clicking a link that downloads malware onto your device. While not exclusively used for credit card fraud (the phisher can pose as a reputable establishment, such as your bank or place of work), it can be a very effective way to score your card information.
Phishing usually contains a link that takes you to a website simulating the company or merchant the phisher claims to represent. You might land on what appears to be a checkout page that requires you to enter credit card data. A first warning that you’re a target of phishing is a slight difference in an email address, perhaps an inconspicuous misspelling that you aren’t likely to catch unless you’re on alert. Another popular angle is to inform you that you’ve won a sweepstakes or lottery prize—but to collect, you must give your credit card details.
If you fall for the ruse, the phisher will use your information to start spending on your credit cards.
How to prevent it
If an email or a text is soliciting payment information, it’s worth making a call to the company in question—just to be safe. Don’t ever give personal details electronically unless you know to whom you are talking.
And don’t be bullied into cooperation by alarming language such as “this is your last chance” or “final notice.” Scammers love to throw that verbiage around, as it’s likely to make you nervous and perhaps a little less rational.
4. Social Security benefits scam
How to spot it
Social Security is a favorite target for fraudsters. You may receive a notice that urges you to make a payment or your Social Security number will be suspended. That’s not possible, so just ignore the threat.
How to prevent it
If the Social Security Administration is trying to get your credit card information (or Social Security number, for that matter), to halt an impending SSN suspension, you can know for certain that it’s an impersonator. Don’t give out any credit card information.
5. The hot spot scam
How to spot it
A particularly insidious method of fraud is via malicious hot spots. When using public Wi-Fi, it’s critical that you choose your network carefully. Your device may pick up two types of dangerous hot spots.
- The hot spot prompts you to pay for internet access before you can begin surfing. This could be a fraudster effectively phishing for your credit card information.
- The hot spot gives you no-hassle internet access, but the owner of that hot spot can monitor your activity.
Both of these spell trouble if you’re not diligent. These hot spots are often named something innocuous, such as “Free Wi-Fi.”
How to prevent it
If you’re planning to use public Wi-Fi, there are a few easy things you can do to protect yourself. First, never enter your credit card information. If you’re in an establishment that demands you pay for access, immediately ask if they actually manage that hot spot. If not, then a phisher probably does.
Also, you should never visit sensitive websites when you’re on public Wi-Fi. If you sign into your credit card account, a scammer can see your activity and instantly know your login credentials. If you’re in the habit of doing sensitive work on public Wi-Fi, you should invest in a virtual private network (VPN). This will keep your connection secure anywhere you go.
6. The credit card 'sign-up farm' scam
How to spot it
Scammers capitalize on the desire of folks with good credit to make fast and easy money. One popular tactic, known as “sign-up farming,” is to offer to pay you for the use of your SSN to sign up for other credit cards under your name. The supposed end goal is to accrue lots of rewards (bank points, airline miles, hotel points, etc.), for which the scammer promises to pay you. It’s not uncommon to be offered thousands of dollars.
In reality, you’ll be paid nothing. Once the scammer gets the rewards they’re after, you’ll never hear from them again. Even worse, they could leave you with massive balances on your card with no recourse.
How to prevent it
Someone requesting use of your SSN should itself be enough to tip you off to a scam.. Your SSN is one of the most sensitive pieces of information in life. Never reveal it to someone you don’t trust.
Remember, there’s no such thing as a free lunch. If someone offers easy money for virtually no effort on your part, it’s almost certainly a scam.
7. Overcharge scam
How to spot it
Overcharge scams involve a supposed company reaching out to refund you for money it owes you. The believability of an overcharge scam depends on the work the scammer puts into their research. If they’ve acquired some information regarding your spending habits, they could choose a merchant that you use often, increasing the odds that you’ll at least lend an ear to their claim. They could also try a shot-in-the-dark claim with a well-known company, such as Hulu or Verizon, that has a large number of customers.
If the scammer does manage to take you in initially, you should know it’s a scam once they begin asking you for your credit card number. Never volunteer such information.
How to prevent it
Any company calling you to get payment information or login credentials should be handled carefully. You should hang up and call the company yourself to see if you were talking to someone legitimate.
If the communication is an email, examine the address closely or google it to see if it’s official. And never click on any link in an unsolicited email from an unexpected or unknown source.
8. Interest-rate reduction scam
How to spot it
You may get a phone call purporting to help you negotiate lower credit card interest rates. For someone with considerable credit card debt, the chance to save money could be tempting.
These calls usually come with “act fast” language to goad you into making a rash decision. The call might be legit, as there are a number of debt relief companies looking for customers. That said, you should remain seriously skeptical. If the customer service representative asks for your credit card info or payment for their services, hang up. Actual debt relief companies aren’t legally allowed to draw payment until after reducing your debt.
How to prevent it
The most effective way to keep from being duped by interest-rate reduction scams is to not engage with them—ever. If you want to lower your interest rates, call the number on the back of your card and talk with your issuer directly.
9. Arrest phone call scam
How to spot it
One of the most common scams is the threat of arrest. Here’s how it usually goes: After a recorded voice notifies you that your outstanding tickets, fines, taxes, etc. have gone too long without payment, it claims that a warrant has been issued for your arrest. This could be alarming for someone who does have outstanding fines. The phone number may even appear to be an arm of official law enforcement.
Never be taken in by caller ID information that looks official. It can be faked. If the person on the other end of the phone begins asking you for credit card information, hang up the phone immediately, call the agency for which the scammer claims to work, and report the scam.
How to prevent it
If you don’t have overdue fines, taxes, etc., this is obviously a racket. For those who do, the police aren’t going to contact you for a credit card payment over the phone. Once again, never give any personal information over the phone.
10. Donation scam
How to spot it
It’s bad enough that scammers loot the credit card details of the unsuspecting; doing it under the guise of a charity is downright contemptible. Targeting kindhearted credit-card holders through a phone call or an email, a thief may use actual disasters and real charity names. Neither proves validity. To spot fraud, try googling the phone number you’re talking to. It may well have been recognized as from a scammer and labeled as such.
How to prevent it
Legitimate charities are no stranger to calling and asking for donations. Even so, you shouldn't give out your credit card information over the phone. If you believe in their cause and want to donate, it’s much safer to do it via the charity’s website. This will ensure that the charity is real, the money is going where you want it to go, and your payment information is safe. You can also use a site such as Charity Navigator to confirm the validity of the charity.
11. Advance payment for credit services
How to spot it
Those with poor credit may find themselves desperate for a loan with seemingly no options. After a tireless search, they may stumble upon supposed “guaranteed” loans—regardless of credit history. The catch is that you’ll have to pay a fee before receiving the loan.
Similarly, scammers will claim that they can remove negative information from your credit report for a fee. If those negative credit details are accurate, they cannot be removed. They can only fall off naturally (for example, bankruptcy disappears from your credit after seven to 10 years).
How to prevent it
No legitimate lender will give you a loan with no information on your credit history. And they won’t make you pay an upfront fee. What’s more, nobody can strongarm a credit bureau into removing negative information from your credit profile unless it’s erroneous.
Even the few credit cards that don’t perform a hard credit pull to approve you for credit will take many other factors into consideration (such as your income, cash flow, etc.).
TIME Stamp: Never provide sensitive information to a cold call, email, or text.
No matter who’s on the other end of the phone, you should never reveal sensitive details to someone whom you aren’t absolutely certain is above board. If you’re being contacted out of the blue for something that requires you to send your SSN or credit card details, it’s probably a scam. Finally, remember: Government agencies will never call, text, or email you asking for payment or personal information.
Frequently asked questions (FAQs)
How do I protect myself from credit card scams?
If you live by the rule of “never give sensitive information over the phone,” you’re probably not going to fall for a credit card scam. Still, there are other things you can do. For example, use a VPN whenever using public Wi-Fi. Never click on links from unsolicited email addresses asking you to reset your password. Never download anything that comes from an unknown sender.
What should I do if I think I’ve been scammed?
If you think your credit card has been compromised, you should freeze your account. If you see unauthorized charges on it, immediately notify your issuer, so it can credit the money back to you, void your current card number, and send you an alternate card.
You should also comb through your monthly statements to make sure that the fraud hasn’t bled into other credit card accounts. After all, depending on the information that was stolen, more than one account could be vulnerable.
What information does a scammer need to use my credit card?
All scammers need is your name, credit card number, and expiration date. For many purchases they don’t even need the CVV (those three digits on the back of your card or, if you’re an American Express cardholder, four digits on the front).
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