One Simple Act Can Protect You From Credit Card Fraud

Young woman using smartphone
Eric Audras/PhotoAlto

By Matt Schultz

Fourteen times a day.

That's how often the average Facebook (FB) user with a smartphone checks the social network, according to a 2013 International Data Corp. study commissioned by Facebook. Add all those visits up, and smartphone users spend about a half hour each day just on that one website.

We don't think anything of visiting our favorite sites every day, often more than once. But what about your bank's website, or your credit card issuer's? How often do you visit them? The answer is likely very different. And in this age of data breaches and fraud, that can lead to trouble.

When you log in to your bank or credit card website, you might be surprised to see just how many transactions there are. After all, you probably can't recall every single purchase you made in the past 30 days –- possibly even the past 10 days. We all have more important things to think about than the last time we got gas or a soda at the convenience store. That's a problem. And it's one that credit card and debit card fraudsters count on.

The $2 Test

One of the most common ploys used by credit card fraudsters is to make a small purchase at a gas station or a convenience store to make sure that the stolen credit card information they have is valid, and that the account is still active. Keeping that initial purchase small helps them avoid setting off any alarm bells with the victimized cardholder.

Think about it: If you saw a strange $2 purchase on your card from a few weeks ago, how likely would you be to take the time to call your issuer and have the charge wiped out? Would you even be sure it was a mistake? And that assumes that you would even notice the charge. So how do fight this kind of fraud? With more frequent visits to your banks' websites.

  • Make it part of your routine. We're all creatures of habit, so build checking your bank accounts into your daily schedule. It may seem a little unusual at first, but after a few days, it'll be old hat and you won't even think about it.

  • Focus more on your checking account. Not willing to check all your accounts so often? If you're only up for adding one to your daily routine, make it your checking account. That's because time is of the essence when it comes to debit cards and fraud. With a credit card, federal law typically limits your liability for fraudulent activity to $50, regardless of when you report the activity. That's not the case with debit cards: If you report the fraudulent debit card activity within two days of seeing it, your liability under federal law is $50. Wait longer than that and your liability shoots up to $500. (If you wait more than 60 days, there may be no limits to your liability.) Plus, remember that debit card fraud takes real money out of your bank account -– money that can take up to two weeks for the bank to replace. That missing money could cause a mortgage payment or car payment to bounce, and that can cause even bigger problems.

  • Remember that it gets easier the more often you do it. If it's the first time you've checked your bank account, it might take a little while to review several dozen transactions. But when you log in the next day, and every day thereafter, you'll only have a few to check out -– and chances are that they will be fresh in your mind, so any fraudulent ones stick out like a sore thumb.

The vast majority of times you check your account online, it'll take only a minute or so, and nothing will look amiss. But if the day comes when something does look strange, you'll be ready to act and you'll be glad you took the time -– even though it briefly kept you from viewing pictures of your friends' kids or videos of piano-playing cats on Facebook.

This content is not available due to your privacy preferences.
Update your settings here to see it.