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Digital Fraud Wiki

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How to stop lost or stolen card fraud

stolen credit card

Every year, millions of people fall victim to lost or stolen card fraud. They may misplace a wallet or fall victim to a cunning pickpocket. Their card information might be stolen online. No matter how it happens, lost or stolen card fraud is a scary situation with serious consequences.

Thankfully, banks know how serious of an issue this is, so there are protections in place. They also have sophisticated fraud prevention platforms to catch lost or stolen card fraudsters.

In this post, we’ll dive into how those platforms work, what to do if your card is lost or stolen, and everything you need to know if this happens to you.

What to do if your credit card is lost or stolen

Contact your card issuer as soon as you notice your credit or debit card is lost or stolen. Taking quick action is the most important step. Notify them that your card was lost or stolen, and they will start the recovery process. Most credit card companies have 24/7 customer service hotlines for this listed on their website.

Next, ask your card issuer to freeze your card. This prevents future unauthorized transactions and helps you get credited for any that did happen. Your issuer will then deactivate your card and send a new one with a new account number.

As you wait for a new card, watch your card account for suspicious activity. Most card issuers and banks let you view your account activity in real-time. If you see any unauthorized charges or transactions, report them immediately.

If you have recurring payments or automatic bill payments set up with your lost or stolen debit card, remove them. Contact the merchants or service providers to update your payment information with your new card details.

Am I responsible for charges if my credit card is lost or stolen?

No, in nearly all cases you are not responsible for unauthorized charges on a lost or stolen card. The Fair Credit Billing Act (FCBA) offers US consumers protections in these specific situations.

Under limited liability laws in the US, you aren’t liable for more than $50 of unauthorized charges on a lost or stolen credit card. Most card issuers have zero-liability policies, meaning you won’t be responsible for unauthorized charges anyway.

How is debit card and credit card information stolen?

Fraudsters have many tricky ways to steal debit card and credit card information. Here are a few of the most common:

Card skimming

Card skimmers are deceptive devices placed on payment terminals to capture card details. Fraudsters attach them to gas pumps, ATMs, and other points of sale. They can copy the unique magnetic stripe or chip as well as the name and card information. Then, fraudsters use that stolen data to create counterfeit cards or enter the details in online stores.

Data breaches

Cybercriminals have been pulling off increasingly damaging data thefts for years. Merchants that store card information for payment are always targets. Once hackers steal card information, they often sell or leak it to other scammers. Fraudsters can simply look up lists of stolen cards and use the details for their own transactions.

Phishing

In phishing scams, fraudsters pose as a legitimate entity—say a bank or trusted merchant—through emails, text messages, or phone calls. With help from tools like Chat GPT, scammers create convincing replicas of emails or websites that ask for your card information. Once you enter it, the scammer stores it in a list with other stolen card information.

Malware

Hackers create malware to hide in seemingly harmless places, like emails or replicas of trusted websites. Once users download this malware, it captures their credit card information and stores if for fraudsters. Malware can also come through vulnerable network connections, so be careful to use a VPN and avoid sites without and SSL certificate (https).

Physical theft

This method is what most likely popped into your head first when thinking of stolen cards. Thieves can take cards from wallets, purses, mailboxes, or even right out of your pocket.

Do banks have protection for lost debit cards and lost credit cards?

Yes, banks and card issuers have protections in place for lost or stolen debit and credit cards.

On top of the protections of zero-liability policies and FCBA regulations, issuers will deactivate a card reported lost or stolen. They will also replace a card for free when this happens. To catch lost or stolen card fraud as it happens, issuers monitor transactions and send fraud alerts to cardholders. This is another early warning sign that prevents unauthorized transactions as soon as possible.

How to protect account information if you lost a card or had it stolen

First, report your card lost or stolen ASAP to prevent unauthorized charges. Keep monitoring your account activity to catch any charges that might settle after you deactivated the card.

Next, change your account password. You may want to change your username as well or swap the email associated with your account. Log out of any devices where you have the card stored, and remove it from saved payment options wherever you can. Set up two-factor authentication on your accounts to make sure no one logs in without your knowledge.

If your card provider offers transaction alert services, use them. That lets you passively stay on top of possible new fraud without manually checking.

Beware of phishing attempts that might come via email, text or call. Remember, your information may have been exposed, so treat every piece of communication with care and skepticism.

Lastly, destroy all old cards. Cut them up and put them in different trash containers to ensure someone can’t find the pieces and put it back together.

How AI prevents lost or stolen card fraud

AI is crucial in detecting lost or stolen card. Thanks to advanced algorithms and machine learning, it’s adept at spotting fraud patterns.

AI-powered systems can analyze vast amounts of transactional data, much more than human fraud analysts. It constantly monitors customer behavior, making anomalies that indicate potential fraud stand out. This could be unusual spending patterns, geographical inconsistencies, or atypical transaction types. Any of these trigger a real-time alert, then the fraud team can manually investigate. The best-in-class AI fraud platforms reduce false positives while increasing detection.

AI can also analyze user biometric behavior patterns like typing speed, swipe gestures, or device interaction patterns. It uses these to build user profiles and detect anomalies against these standard patterns. AI can even link these profiles together and map relationships. That increases its understanding of normal money movement and makes fraud harder to hide.