Published in: Credit Cards | April 16, 2019
5 Common Credit Card Scams to Watch Out For
All of these can be avoided if you know how to protect yourself.
The widespread adoption of EMV or “chip” credit cards has prevented fraud related to duplicating credit cards. However, credit card scams are unfortunately alive and well. Here are five nasty credit card scams to keep an eye out for, and how to prevent yourself from becoming a victim.
1. Phony fraud alerts
I’d like to think that everyone who regularly uses a credit card thinks that alerts about potential fraud are a good thing. While it certainly caused me an inconvenience, I was thankful a couple of years ago when one of my credit card issuers called to ask if I had just tried to use my card at a dollar store in Kentucky, a state I’ve never been to.
However, one popular credit card scam involves people impersonating your credit card company in order to get your information. For example, they might already have your credit card number but need to find out your billing zip code or the three-digit code on the back of your card. They’ll call you to alert you of potential fraud and ask to “verify” your information.
You should never have to give out your credit card information when someone calls you. If you have any reason to believe you’re speaking with a scammer, the best course of action is to hang up and call the number on the back of your credit card. If the fraud alert is legitimate, they’ll be able to help you just as well as the person who initially called.
Skimmers are devices placed in or over card readers that are designed to steal your credit card’s information without your knowledge. If you’ve ever had unrecognized charges show up on a credit card that’s never been outside of your possession, it could be a skimmer that’s responsible.
While a skimmer can theoretically be placed on any credit card swiper, they are most commonly found on card swipers that aren’t continuously watched. Outdoor ATMs or ATMs inside of convenience stores or other businesses are common skimmer locations, as are the card readers on gas pumps. In fact, I was the victim of credit card fraud several years ago, and the problem was traced back to a skimmer at a gas station in Florida.
With the emergence of chip-based cards, it has become considerably easier to avoid skimmers. However, there are still traditional card swipers in some of the most skimmer-prone locations, and unfortunately there are devices that have begun to appear that can even steal information from chips. A good tactic is to avoid swiping your credit card in these places. For example, when you’re paying for gas, go inside and pay at the register.
3. Reduced debt or interest rate scams
If someone called you claiming to be from your credit card company, and they said they could cut your credit card debt in half, would you believe them? You shouldn’t -- this is one of the most common credit card scams.
Here’s how it works. A “representative” from your credit card company calls and either offers to slash your credit card debt or dramatically lower your interest rate -- for a price. They’ll ask to verify your credit card to charge an upfront fee for the service. The only problem is that they’re not from your credit card company.
To be sure, credit card companies do offer their existing customers promotional interest rates from time to time. But you should never have to pay anything upfront to get it.
4. Tax debt scammers
This is more of a tax scam than a credit card scam, but it’s still important to mention. A scammer calls you and pretends to be from the IRS. Some of these scammers are comically bad (you can find some funny YouTube clips of people who record bad scammers), but some are dangerously convincing. I’ve even heard of tax scammers who get “IRS” or some variation to show up on the victim’s caller ID.
These scammers claim that you owe some tax that needs to be paid right away, or else. They might threaten to have you arrested unless you immediately pay the debt using a credit card or a prepaid debit card.
This scam is best avoided by knowing what the IRS won’t ever do. Specifically, the IRS will never insist on a specific form of payment, will never initiate contact over the phone, and will never demand tax be paid immediately without giving you a chance to question the amount owed and why you owe it. They also won’t threaten to have your local police force come arrest you. If someone does any of these things, you can be pretty sure you’re being scammed.
5. Wi-Fi hotspots
If you connect to a Wi-Fi network that doesn’t require a password in a public place, information you transmit can potentially be seen by other people. Scammers have been known to set up their own “free Wi-Fi hotspots” for this purpose.
Now, scammers who know what they’re doing can get your transmitted information on any public network. For example, if you’re at a coffee shop and connect to its unsecured network, it’s entirely possible that someone could be viewing the information you send. It’s a good rule of thumb not to say, log in to your credit cards’ websites, while on these networks.
The bottom line on credit card scams
As you can see, there are plenty of ways that scammers can try to steal your credit card information -- and this isn’t even an exhaustive list. The point is that it’s important to take appropriate steps to protect your personal information from thieves at all times, and to know what signs of fraud to keep an eye out for.
Don't pay credit card interest until 2021
The Ascent just released a free credit card guide that could help you pay off credit card debt once and for all. Inside, you'll uncover a simple debt-cutting strategy that could save you $1,863 in interest charges paying off $10,000 of debt. Best yet, you can get started in just three minutes!