Tapping your credit card against a payment terminal was meant to make your life easier. However, it seems that every convenience also means new opportunities for fraud.

Over 127 million Americans were victims of credit card scams, and the situation is only getting worse, according to one study conducted by the Federal Trade Commission. In 2021 alone, the FTC reported $5.8 billion in fraud losses, which was a 70% increase over the previous year.

Since the number of credit card schemes is on the rise, it’s critical for cardholders to learn how to protect both their personal information and their money. In this article, we’ve rounded up the most common credit card scams, how they happen, and how you can keep your credit card information safe from scammers.

How Does Credit Card Fraud Work?

A credit card scam is when someone steals your card information, account numbers, or actual credit card to make unauthorized charges. Since 70% of Americans own credit cards, there are a lot of opportunities for crooks who take advantage of card security issues or use social engineering techniques to trick you into giving up your card or money.

So, how do criminals trick their victims into revealing their credit card numbers?

Credit card scams range from basic methods such as shoulder surfing to advanced schemes like card skimmers at gas pumps and keylogging software. But, regardless of the scam, the goal is the same: steal enough of your Personally Identifiable Information (PII) — such as Social Security numbers, mobile phone number, or address — or your credit card information to gain access to your account and drain it.

Red Flags of Credit Card Scams

In certain cases, you may not even realize that you’ve been a victim of credit theft until it’s too late. But, the faster you act, the better chance you’ve got of keeping your money safe.

Here are the most common warning signs that show your credit card has been hacked:

• Unsolicited calls, texts, or emails. Most frauds rely on some form of direct communication. If you start to notice an increase in communications from companies you’ve never heard of or strangers (via email, text, phone, social media, post, or in-person), you may be vulnerable to credit card scams. Be very careful of any communication from people pretending to represent your bank or a government agency.
• Bank alerts about suspicious transactions. Your card issuer, your bank, and some of the credit bureaus all provide extensive anti-fraud services such as credit monitoring and spending alerts. The bureaus will send you a notification if they detect suspicious activity on your account. This behavior could include attempts to apply for new credit lines or change personal details. Criminals can even change your mailing address using a USPS change-of-address form; once they reroute your email, they can easily steal your identity.
• Unauthorized credit card charges. Many scammers usually only make small charges before carrying out greater thefts (a classic fraud known as “carding”). Look for small unexplained transactions, unfamiliar payments, or payment activity from strange locations.

Here are 7 common credit card scams you probably didn’t know about

1. Scammers offering interest rate deductions

When it comes to interest rate deduction scams, criminals claim to represent well-known credit card issues and lenders. They contact you by phone or email, stating that you qualify for a significant reduction in your credit card interest rate.

This is supposed to be a limited-time offer. The caller — or prerecorded message — will highlight how important it is to act immediately and ask for your credit card information.

In April 2021, the FTC reported an $11 million repayment to those who were victims of a big interest rate scam. The fraudsters created fake websites before launching a cold call campaign meant to give people reduced interest rates. The victims had to pay a fee ranging from $695 to $1495 to “benefit” from it.

How to protect yourself from this credit card scam:

• If someone emails, texts, calls or tries to reach you in any way asking for your credit card, just hang up. Honest financial institutions don’t make unsolicited calls or request money over the phone.
• If you want to research an offer from a company that you believe may be real and honest, contact them directly by using the official email or phone number listed on their website.

2. Charity frauds taking advantage of trending news stories

Charity fraud happens when scammers pose as certain organizations and encourage people to donate to charitable projects. The money is then transferred directly to a fraudster’s bank account.

This credit card scam can be easily adapted to trending events in the news. Scammers can simply adjust their scripts and trick people by claiming to be helping war victims, children in need, or vulnerable people in disaster areas after a flood or hurricane.

When you agree to make a charitable donation, the criminals may sell your credit card information to other fraudsters on the Dark Web who will use your data to carry out other types of identity theft.

In March 2021, the FTC successfully shut down a fake fundraising ring that operated in 38 states. The credit card scam affected 67 million people — over 1.3 billion calls were made to steal more than $110 million. The scammers used robocalls claiming to help firefighters, veterans, and vulnerable children.

How to protect yourself from this credit card scam:

• If you receive calls asking you to make charitable donations, don’t give out any information — especially your credit card numbers — and hang up.
• Before making a donation, research the organizations and the cause using websites like the Better Business Bureau or Charity Navigator.

3. Public Wi-Fi that steals your credit card information

The hotspot scam, also known as the public Wi-Fi scam, is a common technique of credit card fraud. Unsecured networks are used by hackers to gain access to personal devices and steal data such as credit card details.

Some criminals can generate fake Wi-Fi signals with embedded tracers that can collect credit card information as unsuspecting users type personal data on their devices. Another type of this scam involves creating hotspots that require internet users to enter their credit card details before gaining access.

Sometime in April of 2022, Florida Attorney General Ashley Moody alerted people not to pay their taxes using unsecured public Wi-Fi. Fraudsters often wait for people to type sensitive information on their devices using Wi-Fi networks (even at home) before intercepting the data.

How to protect yourself from this credit card scam:

• Install a high-level antivirus on all your devices, making sure to also use a VPN.
• If you need to use public Wi-Fi, it’s better to ask a staff member for the login credentials instead of joining any open Wi-Fi networks.
• You should never submit your credit card credentials to obtain access to unsecured Wi-Fi.

4. Fraudulent sweepstakes and reward scams 

Most scammers are very well aware of how many people make online purchases, and they seek to manipulate those who are looking for great discounts and promo codes. So they use reward scams to trick their victims by promising coupons or discounts in exchange for making purchases. You may receive a text message or email that appears professional in its messaging and design.

But instead of legitimate rewards, this credit card scam tricks victims into clicking on links that trigger malware downloads. Once this occurs, the hackers will have access to your credit card data.

The Department of Justice charged a Mississippi couple with 18 counts of conspiracy correlated with a sweepstake scam. The two pretended to run a multi-million dollar lottery stealing over $300,000 from victims who agreed to prepay tax amounts on the false rewards.

How to protect yourself from this credit card scam:

• Don’t use your credit card to pay any fees for unexpected “winnings.” Authentic rewards from trustworthy companies rarely necessitate upfront costs.
• If someone is offering you a reward from a reputable business, check their website or contact their customer service to ensure the offer is genuine.

5. Shimming and skimming scams

In shimming and skimming scams, criminals install skimming devices inside or on card readers and card payment terminals, which collect card data.

Known targets for this kind of scam include automated teller machines (ATMs) and gas pumps. Over the last few years, many credit card companies installed Mastercard, Visa (EMV), and Europay chips to prevent physical card scans.

Card skimming, on the other hand, is still one of the most common credit card scams. The FBI estimates that skimming costs consumers and financial institutions more than $1 billion per year.

For instance, six fraudsters were arrested in Florida after the Miami state police and FBI uncovered a skimming operation that stole over $5 million from victims in eight states.

How to protect yourself from this credit card scam:

• Look for signs of misuse or tampering whenever you use your credit card at the store or ATM.
• Notify employees if you suspect the presence of a skimming device, particularly on any external units that are more likely to be a target for scammers (like gas station pumps).
• Switching to contactless or mobile payment increases your chances of avoiding this fraud.

6. Overcharge scams asking you to “verify” your card numbers

An overcharge scam occurs when criminals make phone calls or send emails warning you about an overpayment on your credit card. But in order to get your refund, you must first “verify” your credit card details. In reality, there’s no overcharge, and the data you enter on your device will be sent to a scammer.

Evergy, an electric utility provider, warned its customers in Lawrence, Kansas, about this kind of credit card scam. In these calls, the caller posing as an Evergy representative informed customers they’ve been overcharged on an electric bill recently paid and must give their credit card details to get a refund.

How to protect yourself from this credit card scam:

• Don’t provide any sensitive data over the phone to strangers.
• If you suspect an overcharge scam, hang up right away, alert your credit card issuer, and keep an eye on your statements for any suspicious activity.

7. Phishing scams asking for card details or payment

A phishing scam is a sort of social engineering strategy in which fraudsters contact victims via phone calls, text messages, or emails. Thieves will often act as well-known agencies, organizations, or companies in an attempt to build trust before stealing valuable or sensitive information from victims.

For instance, someone pretending to be from your bank may give you a call to “alert” you that your credit card numbers have been stolen. They will use urgent or even threatening language to make you give them your credit card details and other sensitive data they can use to commit fraud.

In August 2021, the FBI charged four Allied Walled executives for stealing over $150 million in credit card transactions via more than 100 sham merchants.

How to protect yourself from this credit card scam:

• If you receive a text message, email, or phone call from someone with urgent requests for credit card payments or money, say no.
• Never download any attachments or click on links from unknown senders’ emails.

What To Do if You’ve Been the Victim of a Credit Card Scam

If you’ve become a victim of a credit card scam, acting quickly can help minimize the financial damage. Once you realize you’ve been targeted, make sure to follow these six steps to keep your personal information safe.

1. Freeze your accounts

Call your bank and tell them to freeze your compromised account. Most credit card issuers have security protocols meant to protect customers’ credit funds. Be ready to provide extra verification in order to restore control of your compromised account.

2. Place a fraud alert with all three credit bureaus

To minimize any potential impact of a credit card scam on your credit profile and credit score, place a fraud alert with the three major credit bureaus (TransUnion, Equifax, and Experian). These credit bureaus also provide monitoring services to prevent and detect future identity theft attempts.

You can reach them by calling:

• TransUnion: 1-800-680-7289
• Equifax: 1-800-525-6285
• Experian: 1-888-397-3742

3. Request a free credit report

When you get in touch with the credit bureaus, ask them to give you a copy of your credit report. Once you have the documents, look carefully to check for any suspicious activity that could lead to additional fraud.

For example, if you notice any new credit card applications, loan requests, or account information changes, alert the credit bureau.

Pro tip: You should sign up for a credit monitoring service to receive alerts if there’s any unusual behavior on your credit file or accounts.

4. Report the credit card scam to the authorities

Not only should you submit a fraud alert to the FTC, but you should also file a police report with local police. This is a very important step as reporting fraud gives law enforcement crucial information that may help them track down criminals or, at the very least, protect other potential victims from falling prey to future scams.

• You can submit your fraud alert to the FTC online via their website.
• For further information, you can also contact the FTC at 1-877-ID-THEFT (1-877-438-4338).

Also, report the fraud to the location where your card was used. Most companies have a fraud department that can prevent scammers from making any more unapproved transactions.

5. Create new secure passwords

Adjust all your old passwords to help prevent other unauthorized charges. Many criminals can access multiple accounts using a single compromised login, so you should change your passwords as soon as possible after any type of breach.

You can improve your security by using a password manager. There are several options you can choose from that will help you keep your passwords in a secure place. If it happens that one of your accounts has been compromised, the tool will send you an alert.

6. Dispute fraudulent charges

Thankfully, we have The Fair Billig Act that protects consumers from the financial consequences of dangerous credit card scams. Once your accounts are secure, you can claim chargeback. Reach out to the affected companies to initiate reimbursement for any fraudulent transactions made on your credit card.

Fraudsters are smart, so you have to be smarter. Credit card scams aren’t just something that happens to other people. If you have a credit card, there’s a great chance that you’ll be a victim of fraud at some point as well. Almost 60% of cardholders have noticed at least one unauthorized payment on their account.

If you want to protect both your personal information and money, you must keep your credit card information safe.

Managing your finances isn’t something that happens overnight, so we thought this article may also help you: 8 Things Smart People Never Do With Their Money.