Robert Siciliano Identity Theft Expert

Credit card fraud comes in 2 flavors; account takeover and new account fraud. Account takeover happens when the identity thief gains access to your credit or debit card number via criminal hacking, dumpster diving, atm skimming or you simply hand it over to a relatively trusted person at a restaurant or retailer. Account takeover in the form of credit card fraud is the most prevalent form of identity theft. I’ve never actually considered this “identity theft” in a true sense, I’ve always viewed it as simple credit card fraud.

New account fraud as it relates to credit cards, occurs when someone gains access to your personal identifying information including name, address and most importantly Social Security Number. With this data they can open a new account and have the card sent to a different address. This is true identity theft. Once in receipt, the identity thief maxes out the card and doesn’t pay the bill. Over time the creditors eventually find the victim and blame them for the non-payment and demands funds. New account fraud is a mess and destroys the victims’ credit. More about how to protect yourself in a bit.

Victims of account takeover often discover the fraud in numerous ways. They may discover fraudulent charges on a credit card statement or they are alerted via the credit card company of charges that don’t make sense to the victims spending habits and the credit card company locks down the card. Credit card companies have anomaly detection software that constantly watches credit card transactions looking for red flags. For example, in a card present transaction you may hand your credit card to a gas station attendant in Boston at noon, and then 1 hour later a card present purchase is made in a tiny village in Romania, a red flag goes up. Common sense says you can’t possibly get from Boston to Romania in 1 hour. The software knows this.

Account takeover will result in the victim paying for fraudulent charges only of they don’t detect it and report it within a 60 day period. That 60 day window, 2 billing cycles. should be enough for most account conscious consumers who have a clue on their spending. After 60 days you are out of luck. So pay attention to your statements. What kicks in during those 60 days is a “zero liability policy” that was invented by the credit card companies to reduce fear by consumers who were concerned about fraud, mostly online.

Zero liability means the card holder may be responsible for up to $50.00, however most banks waive that fee too.

While account takeover may not cost you in terms of paying back the fraudulent debt, (as long as you are paying attention you’re your statements), it certainly can certainly cost you in other ways. When I’m asked “How do I protect my credit cards”, I say “don’t use it” and frankly, don’t worry about it. I use credit cards for every possible financial transaction and pay one bill at the end of the month.

But new account fraud is an entirely other story and one that can and will hurt you if you don’t protect yourself. When that fraudulent card is opened and un paid, you may not be held financially responsible for the charges themselves, but you will pay in time, and time is money, and in some cases you may pay lawyers, private investigators and take time off from work depending how big an issue new account fraud becomes. Victims have lost opportunities to buy homes because they were denied credit due to numerous unpaid fraudulent debts.

Protecting yourself from account takeover is easy. Simply pay attention to your statements every month and refute unauthorized charges ASAP. I check my charges online once every 2 weeks. If I’m traveling extensively, especially out of the country I give the credit card company a heads up letting them know so they don’t shut my card down while I’m on the road.

Protecting yourself from new account fraud requires a little more effort. You can attempt to protect your own identity, by getting yourself a credit freeze, or setting up your own fraud alerts. There are pros and cons to each. You should definitely do one of them.

Invest in Intelius Identity Protect. Because when all else fails you’ll have someone watching your back. Includes a Free Credit Report, SSN monitoring, Credit & Debit Card monitoring, Bank Account monitoring, Email fraud alerts, Public Records Monitoring, Customizable “Watch List”, $25,000 in ID theft insurance, Junk Mail OptOut and Credit Card Offer OptOut.

Robert Siciliano Identity Theft Speaker discussing identity theft hackers

Be Sociable, Share!