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It’s no secret that credit card fraud is one of the most common forms of fraud in the United States. It’s also one of the most costly forms of fraud. According to Bankrate, credit card fraud will cost the United States economy about $165.1 billion over the next ten years.

Let’s explore everything you need to know about credit card fraud—and more importantly, how your business can avoid it. 

What is credit card fraud?

Credit card fraud is a term used to describe any unauthorized use of your credit card. A bad actor may do this to purchase goods, make a payment towards an outstanding balance, or open new accounts.

If left unchecked, credit card fraud could cause a detrimental impact on your credit score and credit report, in addition to the loss of money.

The good news is that if you catch it early, you can prevent any long-term damage. You’re also not liable for fraudulent activity, though you may face some challenges in getting fraudulent charges removed from your account.

Due to its prevalence, credit card fraud has become a central focus in enterprise risk management.

How does credit card fraud happen?

There’s no one way that credit card fraud occurs. Some of the most common include:

  • Phishing: Bad actors send emails that look like messages from financial institutions to obtain your account login information and perform account takeovers.
  • Skimmers: Credit card information can be obtained by malicious card readers inserted into gas pumps or store terminals. Every time a card is swiped, the reader logs the data.
  • Phone and mail scams: Scammers also get their hands on credit card information through phone- and email-based schemes.
  • Online purchases: Hackers break into online stores and steal customer card data or simply intercept it as it’s transmitted from the customer’s computer to the company’s server.
  • Physical card theft: Some con artists simply steal credit cards and use them before the victim realizes they’re gone.

How to avoid credit card fraud

Use virtual credit cards

Online purchases are one of the most common ways for scammers to get your data. A virtual card is a great alternative to avoid having your business credit card information stolen.

Using a virtual credit card gives you the ability to keep your primary account information out of the hands of scammers, as well as the opportunity to quickly shut the card down after you use it for your purchase. You can create a new card any time you need it.

Some modern options, like Ramp virtual cards with additional features like easy vendor management, complete control over spending including fine-tuned spending limits, and accounting integrations for better expense management.

Avoid unsecured websites

SSL security is one way to help ensure that transactions you make using websites are secure. Before you make any purchase online, look to the left side of the address bar. If you don’t see a locked padlock icon, the website doesn't have an SSL security certificate and is not secure.

Use tap-to-pay where possible

Most skimmers require the victim to swipe their card in order for the fraudster to get the card information. This means that for the most part, when you use the tap-to-pay features of your card, fraudsters won’t be able to get your information. Although this is a way to reduce your risk, some fraudsters have developed ways to steal information from tap-to-pay cards as well, so this isn’t a 100% effective solution.

Take advantage of mobile wallet services

Mobile wallets utilize the tap-to-pay feature, but with an added level of security. When they transfer your account information to the merchant, they use tokenized data. This means that even if a con artist does intercept the communications, they won’t be able to steal your card data as it’s only a token for the specific transaction you made.

There’s a wide range of mobile wallet options to choose from, such as:

  • Apple Pay: Apple’s mobile wallet solution that’s popular among iPhone owners.
  • Google Pay: Google’s mobile wallet solution that’s popular among Android users.

Although the two options above are the most popular, they’re far from the only options available. Do your research to find a mobile wallet option that works well for you.

Keep in mind that while payments with mobile wallets often add layers of security, there’s no 100% secure electronic payment option. Mobile wallets may be targets for phishing attacks, data breaches, and other forms of credit card fraud.

Keep an eye on your credit card statements

It’s also important to keep an eye on your money. No matter what security measures you take, a fraudster might still find a way to access your account.

Protect yourself by paying attention to your credit card statements and looking at every transaction. That way, you’ll notice any fraudulent purchases if they occur.

What to do if you suspect credit card fraud

If you suspect fraudulent activity on your account, don’t panic. You have a clear course of action. Follow these steps:

  1. Contact your credit card company. They’ll review the fraud and protect you with zero liability for unauthorized charges under federal law. If the charge was fraudulent, you’ll get your money back. In the meantime, your credit card company will issue you a new card.
  2. Check your other accounts to make sure none of them have been compromised as well. If they have, contact the issuers of those accounts.
  3. Update the passwords on all of your accounts to ensure fraudsters don’t have access.
  4. Notify the relevant credit bureaus to ensure the fraud doesn’t impact your credit report.
  5. File a police report. Police may be able to investigate and find the culprit.
  6. Contact the Federal Trade Commission (FTC). You can file a report at Thoroughly explain the fraudulent charges and provide as much detail as you can.
  7. Be patient. It may take some time for your credit card issuer to complete the review of the fraudulent transactions. You might also have to put in some work to get the charges removed. Nonetheless, if the transactions are deemed to be fraudulent, you’ll be refunded the amount of the transactions plus any associated interest and fees.

Stop fraud in its tracks with Ramp virtual credit cards

There’s nothing you can do to eliminate the threat of con artists. However, there’s plenty you can do to stop fraudsters from being able to attack your company’s financial well-being. One of your best courses of action is to use Ramp.

Ramp is an all-in-one money management and spending platform. You can access as many physical and virtual spending cards as you need, monitor your transactions in real time, and set up alerts to alleviate fraud risk.

Ramp doesn’t just help you avoid fraud. It also integrates with your accounting software for better bookkeeping and faster closings, gives you access to the capital you need, and more. You can even empower your employees with spending cards of their own.

Check out how Ramp can help your business today.

Try Ramp for free
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Finance Writer, Ramp
Richard Moy has written extensively about procurement and vendor management topics for companies like BetterCloud, Stack Overflow, and Ramp. His writing has also appeared in The Muse, Business Insider, Fast Company, Mashable, Lifehacker, and more.
Ramp is dedicated to helping businesses of all sizes make informed decisions. We adhere to strict editorial guidelines to ensure that our content meets and maintains our high standards.


Who pays when a credit card is used fraudulently?

In most situations, the bank that issues the credit card will be liable for fraudulent transactions, but that’s not always the case. Sometimes, small business owners may be held liable. This is especially the case if the company uses outdated swipe payment terminals or if the fraud is the result of a compliance issue. In the case of online and over-the-phone purchases, the merchant is always responsible.

What are the most common ways credit cards are stolen?

The three most common ways credit card fraud happens are:

  • Theft of physical credit cards
  • Credit card skimming devices
  • Online data breaches
How can I protect myself from credit card fraud?

Some of the most common signs of credit card fraud include larger-than-average vendor orders and large credit card purchases. Orders with multiple payment cards or multiple shipping addresses are also a red flag.

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