Watch Out for This Clever Credit Card Scam | The Motley Fool (2024)

Not all fraud is big and obvious. You must take this step.

While many people regularly check their credit card bills to make sure that all the charges are correct, others can be lax when it comes to looking over their monthly statements. In addition, since many people pay off their credit cards via an automatic transfer, it's easy for small mistakes to slip through.

Perhaps that's not a big deal if it's a one-time mistake -- maybe a restaurant misreading your handwriting. Not checking your credit card bill, however, could potentially let something more nefarious slip through: small charges for subscriptions that recur each month.

What's happening?

If someone steals your credit card number and runs up a huge bill quickly, it will be obvious to you as well as your credit card provider. That still happens, of course, but some thieves are going for a more subtle approach. They obtain access to a stolen credit card number and use it to create accounts at Spotify, Hulu, Netflix, and other similar services.

These charges are less likely to be noticed by the cardholder. In some cases, they're not paying attention and in others, they may also be a customer of the service, paid for on another card or via another method.

If you have a Spotify subscription and see a charge from the music service on your credit card, it's easy to overlook and for the criminal to get a long-term free ride. That's bad, but it's not the worst thing that can happen, according to ACI Worldwide Senior Fraud Consultant Seth Ruden.

"It's not uncommon for fraudsters to use subscription merchants for testing cards with small transactions before the real high-dollar fraud takes place," he wrote in an email to The Motley Fool. "The cost to use one of these inexpensive merchants doesn't eat into available funds on the card and isn't expected to set off alarms when attempted if the merchant is familiar to the user."

Ruden, who has worked with banks and law enforcement to detect and mitigate financial and cyber-crimes since 2004, also shared some variants of this scam to watch out for. He explained that there are markets where hackers can sell working accounts at services like the ones named above.

"Subscription merchants take many forms, including digital content delivery," he wrote."The likelihood of the merchant being attacked is usually a factor of their product's liquidity, either for sale on a secondary market, or into a different payment channel, like a prepaid debit card. Many stored value products can be resold on secondary markets, online auctions, or P2P exchanges."

What can you do?

Check your credit card bill frequently and be skeptical. Even if you see a charge for a service, product, or website you use, make sure that the cost is correct and that the card you're looking at is the one used to pay that bill.

This is a small-time scam that can either pave the way for a big purchase on your card or slowly add up to a lot of money. The easiest way to fix this is to be vigilant. Make checking your credit card statement something you do often -- at least once a week -- and if you see something, alert your card company.

In most cases, you can do this in your credit card provider's app on your smartphone. Most companies even allow you to report fraudulent or questionable charges right from the app or website.

Having to get a new credit card is a hassle, but it's less of a problem than noticing fraud months later or after it becomes a major charge. A little vigilance goes a long way toward keeping these issues small and stopping them quickly.

Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Netflix. The Motley Fool has a disclosure policy.

Watch Out for This Clever Credit Card Scam | The Motley Fool (2024)


What is the most common credit card scam? ›

One of the most basic credit card fraud schemes is to simply steal someone's credit card or use a card someone has lost. Thieves also intercept credit cards sent to cardholders in the mail.

Can you get your money back from a scam credit card? ›

Did you pay with a credit card or debit card? Contact the company or bank that issued the credit card or debit card. Tell them it was a fraudulent charge. Ask them to reverse the transaction and give you your money back.

How do I stop a credit card scam? ›

Monitor your accounts.

If you spot any unfamiliar activity, no matter the size of the transaction, dispute the charge with your credit card provider immediately. It's common for fraud to begin with the thief making small test charges before escalating to bigger transactions.

How crooks pretend to pay off credit card debt? ›

They want you to purchase items for them using your credit card, saying they will reimburse you. These are typically high-end electronics and gift cards. The use other stolen cards to put money in your account to "reimburse" you for the purchases.

What is the single biggest credit card trap for most people? ›

The biggest mistake you can make with credit cards is to carry a balance every month, financial planners say. While credit cards are a convenient way to spend money, they have punishingly high interest rates that now average 20.75%, according to Bankrate's most recent data.

What information does a scammer need to access my bank account? ›

The easiest way to become a victim of a bank scam is to share your banking info — e.g., account numbers, PIN codes, social security number — with someone you don't know well and trust. If someone asks for sensitive banking details, proceed with caution.

Can credit card scam be reversed? ›

You can dispute credit card charges with your issuer for three reasons under the Fair Credit Billing Act: Someone else used your card without permission. Say a fraudster charged a big-screen TV to your card. You could dispute that payment as an unauthorized purchase.

Will banks refund you if you get scammed? ›

If you've paid for something you haven't received, you might be able to get your money back. Your card provider can ask the seller's bank to refund the money. This is known as the 'chargeback scheme'.

Should I cancel my credit card if I have been scammed? ›

Don't ignore small charges; scammers often start with these to “test” if your card numbers are valid (this is called “carding”). Then, contact your credit card's fraud department and explain what happened. They'll open an investigation, close your compromised accounts, and issue you new cards.

Can banks find out who used your card? ›

Bank investigators will usually start with the transaction data and look for likely indicators of fraud. Time stamps, location data, IP addresses, and other elements can be used to prove whether or not the cardholder was involved in the transaction.

How do you stop a scammer using your credit card? ›

Contact your credit card issuer: Call the phone number on the back of your credit card immediately to report suspected fraud. Your issuer will freeze your account and issue you another card while they investigate the unauthorized charges. Report any suspicious transactions to your credit card issuer.

What is the credit card pay trick? ›

You make one payment 15 days before your statement is due and another payment three days before the due date. By doing this, you can lower your overall credit utilization ratio, which can raise your credit score. Keeping a good credit score is important if you want to apply for new credit cards.

Is the government really paying off credit card debt? ›

When it comes to credit card debt forgiveness, you may think there are government programs that help get rid of debt. Unfortunately, there is no such thing as a government-sponsored program for credit card debt relief.

Is there a fake Capital One? ›

Scammers pose as a legitimate company (like Capital One) or a utility company and request personal information or a payment transfer in order to make things "right" on your account. They might also use a fake caller ID that could show up as a legit company's number and/ or request remote access to your device.

Can the bank find out who used my credit card? ›

Yes. Tracking who used a credit card is often possible, especially if the fraud involved physical transactions at identifiable locations or digital transactions with traceable IP addresses and device information.

What is the biggest risk of a credit card? ›

One of the most significant risks associated with Credit Cards is the potential for accumulating debt. Credit Cards make it easy to overspend, and if you're not careful, you can quickly accumulate debt you may struggle to repay. This can lead to high-interest rates, late fees, and damage to your credit score.

What is the sentence for credit card scamming? ›

shall be fined not more than $10,000 or imprisoned not more than ten years, or both.

What was the biggest financial scam in the US? ›

Jeffrey Skilling is an American former CEO of Enron Corporation, convicted of securities fraud (and other crimes) for his part in the 2001 Enron scandal, a $63.4 billion bankruptcy ($109.1 billion today).


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