Posts Tagged ‘credit card fraud’

Identity theft has become so widespread, the Federal Trade Commission estimates that up to 9 million people in the United States have their identities stolen each year.

Here are 10 facts about identity theft that may help prevent you from falling victim to this widespread crime.

1. You should frequently review your credit reports and credit card statements

Identity theft can go far beyond somebody getting your credit card number and running up purchases at the mall. A perpetrator may rent an apartment in a victim’s name or establish a telephone account. Checking your own financial information is a good way to spot this behavior.

2. Identity theft can have widespread consequences

Identity theft sometimes is quickly resolved, but many victims must spend hundreds of dollars and invest hundreds of hours to restore their good names and their good credit records. Victims have missed out on job prospects, school loans and mortgages.

3. Perpetrators of identity theft use various strategies

Individuals can protect themselves by shredding all personal documents including credit card applications that come through the mail. Also keep a close eye on store employees as they process your purchases. Law enforcement statistics indicate that nearly half of all identity theft is undertaken by somebody who is acquainted with the victim.

4. Even when somebody employs maximum precautions, identity theft still may occur

Some identity theft perpetrators open credit cards with a change of address, which adds to the time before the victim discovers that identity theft has taken place.

5. Government document fraud also is widespread

An identity theft criminal may obtain a driver’s license or official I.D. card with the victim’s name but with their own photo, or use a Social Security number to obtain government benefits, or even file a fraudulent tax return with the victim’s information.

6. If victimized, take the appropriate steps right away

File a police report and retain a copy, notify creditors and dispute any transactions that you did not authorize. The Federal Trade Commission’s identity theft Web site allows you to file a complaint online.

7. Contact the three major credit reporting agencies if you are victimized

These are:

• TransUnion - www.transunion.com
• Equifax - www.equifax.com
• Experian - www.experian.com

8. Place an extended fraud alert on your credit reports

This step not only discourages further fraud, but also may help authorities identify the criminal. You only need to contact one of the three major credit reporting agencies, which then are required by law to inform the other two. Each agency also is required to send you a copy of your credit report.

9. Close all accounts that have been raided or opened by fraud

Be sure to create new passwords and PINs. These new numbers and passwords should be original. For example, it’s not a good idea to use the final four digits of a Social Security number as a PIN.

10. Keep the FTC’s identity theft hotline number with you

Call the FTC toll free at (877) ID-THEFT (438-4338).

Michael Thompson

Gift cards may be small, but they mean big business to the retail and banking industries. According to MasterCard subsidiary TowerGroup, gift cards generate nearly $90 billion in sales each year. With every gift card comes fine print, which could mean additional fees or use limitations. Before buying a gift card, consumers should research the fees and limitations online or directly on a card’s packaging.

Types of Gift Cards

Bank-issued gift cards are branded with the logo of a major credit card company and can be used at any business that accepts the credit cards. Although flexible in use, bank-issued cards tend to charge a number of fees.

Retailer-issued gift cards are issued by stores, restaurants or other businesses and are usually redeemable in that business only. Their policies tend to be more consumer-friendly and they charge fewer, if any, fees.

Activation and Delivery Fees

Many bank-issued cards charge a fee just to be activated, while retailer-issued gift cards are usually activated for free. Walgreens drug stores sell dozens of retail and bank-issued gift cards. The retail-branded cards sold at Walgreens have no activation fees, but bank-issued gift cards with the Visa and American Express logos do require an activation fee.

If a gift card is purchased by catalog, phone or Internet, a shipping charge may apply. Shipping charges can be avoided by purchasing a card directly at a business location. Some gift card issuers will ship gift cards for free, so consumers should watch for such promotions.

Some cards utilize a dormancy fee, usually a monthly service fee, if it is unused for a period of time. A new federal law prevents a dormancy fee if a gift card has been used in the prior 12 months, and consumer pressure has led many gift card issuers to eliminate dormancy fees altogether.

Flexibility of Use

Each gift card has certain limitations. Some gift cards may require purchases to be made either in person or online, or may limit what types of purchases the gift card covers. Some gift cards have no time limit to redeem the card, while others add an expiration date, sometimes as little as one year from date of activation, or the unused balance is forfeited. Gift card issuers know that unused balances mean profits for them. Consumer Reports says nearly 10 percent of all gift card balances are never used, an additional source of revenue for companies that issue them.

Some retailer gift cards are redeemable at other retailers owned by the same parent corporation. Old Navy gift cards can be used at the Gap and Banana Republic stores, while a gift card to Chili’s can also be used at Romano’s Macaroni Grill, On the Border and Maggiano’s Little Italy.

Only a small number of retailer gift cards allow a user to redeem the card for cash. Old Navy cards, for example, allow cash to be redeemed if the card balance is below $5.

Lost or Stolen Cards

If a card is lost or stolen, most issuers will require an original receipt or the card number to replace it, so the receipt should be given with the gift card to the recipient. Some issuers charge a significant fee to replace a card.

Tips to Avoid Gift Card Scams

Scambusters.org warns consumers of schemes involving gift cards. Thieves can steal card numbers and customer service phone numbers off gift cards displayed in stores and later call in to find out if they have been purchased and activated. Once a card has been activated, the thief uses the card number to order items online, draining the gift card before the real owner has a chance to use it.

To avoid problems buying gift cards in person, Scambusters suggests only purchasing cards that do not show their numbers through the packaging or are displayed behind counters to avoid tampering.

Consumers should avoid buying gift cards from third parties like eBay, newspaper ads or CraigsList. These scams often involve stolen gift cards, used gift cards or even counterfeit gift cards that sell for less than the face value and leave a buyer with worthless cards.

With a little research and a few precautions, consumers can not only avoid the pitfalls of high gift card fees, they can also find just the right card that will be used and appreciated by the recipient. Researching the policies and fees of a particular gift card could avoid future problems and help a consumer find just the right gift card.

Victor Medina

In these turbulent financial times, identity theft is rampant, and credit card fraud is a popular way for identity thieves to wreak havoc. Though many don’t realize it, credit card companies do not require consumers show their IDs when using a credit card to make a purchase. In fact, most specifically forbid retailers from asking for ID in their merchant agreements. There are two primary schools of thought on requiring IDs for credit card transactions: One is that requiring IDs helps prevent identity theft, while the other is that it can actually lead to identity theft.

Those who support the requirement of identification feel that it will help protect the card holder from identity theft. If the credit card falls into the wrong hands, the culprit could be caught more quickly if the cashier asks for their ID and sees that it does not match the name and other information on the credit card.

Secure Cards
While all credit card issuers have respectable policies for protecting their customers, Citibank and American Express are standouts. Be sure to check our Citi and Amex credit card deals section.

On the other hand, some believe that the more frequently IDs are used in public, the greater chance they have of being exposed to thieves. A card holder does not need to lose a credit card or ID for their information to be stolen. During a transaction, nearby thieves can quickly record information from IDs, including names, addresses and dates of birth, all of which can be used to steal an identity without the card holder’s realization.

Companies may choose to ask consumers for their identification when they use a credit card, but it is not essential for the transaction to be completed. Credit card signatures (i.e., the signature on the back of a credit card) are the preferred means of verification for most credit card companies as they provide decent protection against all but the best of forgers. Signatures are always required on credit cards.

The differences of opinion on requiring IDs are likely to continue. In the meantime, some retailers will request IDs from their customers and some consumers will encourage retailers to ask for their ID by writing “ask for ID” or “see ID” next to their signature.

Lindsay Woodland

Holiday shoppers need to watch out this year for yet another red flag that might indicate fraud. Gift cards purchased with stolen credit cards have been sold online as a tool for money laundering.

Picture this: Your credit cards are stolen. The thief then uses your credit cards to purchase gift cards from Wal-Mart, Target or any other store. He doesn’t want to actually use those gift cards because they might have been flagged as fraudulently purchased, so he sells them on eBay or Craigslist or any other Web site for a discount off the actual face value of the cards.

Consumers think that they’ve found a hot deal when they purchase a few gift cards at 50 percent of their value, but are shocked to discover that the cards are useless. The original card holder has reported his credit cards stolen, which has subsequently flagged the gift cards. If you fall into this trap, you’ve just put money in a scam artist’s pocket.

The beauty of this scam is that regular consumers with no thought of deception sell gift cards every day. They receive cards from stores where they are unlikely to shop, so rather than letting them go to waste, they sell them at a discount online so they at least walk away with some money they can use. So how can you tell the scam artists from people who just received gifts they didn’t want?

A big red flag is the sale of numerous gift cards at once or over a short period of time. This is a serious indicator that the seller is using stolen credit cards to fund his sales, and you should at least consider that he might be into money laundering. Check out the seller’s past history if you’re using an auction Web site such as eBay, and stay clear of him if most of the previous sales have been gift cards.

Money laundering might also be afoot if you find gift cards for sale that are significantly discounted. Since the seller is using stolen credit cards, he wants to dump the gift cards as quickly as possible. To facilitate the sales, he might mark them down by as much as 75 percent; why would a legitimate seller take that much of a hit?

This holiday season, you might be better off paying full price for gift cards at individual retailers rather than purchasing them online. Stolen credit cards are a serious problem in this day and age, and you don’t want to help money-laundering scam artists — even unwittingly — to line their pockets.

See also: Online Resale of Gift Cards Raises Fraud Alarms, ABC News

Steve Thompson