How to protect yourself from the negative outcomes of credit card fraud.

Arizona reported over 50,000 frauds in 2019 according to a Federal Trade Commission Report. It ranked 6th in overall fraud reports (based on number of reports per 100,000 residents). But fraud is more than lying for gain: it’s also now tied inextricably to identity theft. Credit card fraud makes up the lion’s share of identity theft throughout the United States.

In fact, in 2019 credit card fraud surged by 72.4% compared with 2018. Not all forms of credit card fraud is created equal; again, identity theft leads the way. New account frauds (where someone opens an account in your name) rose by 88% in 2019. All in all, credit card fraud is a significant problem in Arizona: it’s worth understanding so that you can protect yourself and your business from this growing issue.

Definitions of Credit Card Fraud: Arizona Edition

While credit card fraud is a national problem, Arizona has its own particular statutes regarding the larcenous practice. Title 13, Chapter 13-2105 defines credit card fraud as:

1. The intent to defraud with the goal of obtaining something of value, whether with the physical card or the information on it.
2. Falsely presenting as the cardholder.

It’s important to realize that “credit card” isn’t strictly limited to the physical object itself, nor is it strictly limited to credit. Debit cards, gifts cards, and the number of the credit card all count.

Fraud isn’t limited to use of the card, either. There is fraud by obtaining the card: lying to get it in the first place. There is also fraud in knowingly participating in its use: if you suspect that someone may not have full rights to use the card, then you are also participating in their fraud.

Credit card fraud is a class five felony in Arizona, meaning that it carries the possibilities of fines and a maximum of 2. 5 years in jail.

Avoiding Credit Card Fraud

It’s not enough to understand credit card fraud. The goal is to avoid it in the first place. The FBI provides a list of tips to avoid this very common scam — here are a few:

1. Use secure internet sites. Avoid any site that triggers a warning, lacks a locked icon, or otherwise raises your hackles.
2. Use reputable vendors. If you know the company and trust them, they are less likely to defraud you.
3. If working with a private vendor, check on their physical location. Ask for verifying details.
4. Check with the Better Business Bureau for a rating.
5. Avoid offers sent in unsolicited emails.

Most of the ways to avoid credit card fraud rely on building trust. But that’s not always possible, and sometimes third parties get access to our information without our knowledge.

Recovering from Fraud

The good news is that there are clear steps to take on the off chance that someone took your information to purchase a small yacht in the Caribbean and a few cases of Bordeaux (at least the thief has good taste). It doesn’t take much to get back on track, but first you do need to follow these steps.

1. Contact your credit card company.
   
   The credit card company wants to stop charges on the card as much as you do. Maybe even more than you do, because according to 15 U.S. Code § 1643, consumers can only be liable for $50 after the company has been notified. If you want to avoid racking racking up big costs, the key is to talk to the company quickly.
2. Report the theft to local law enforcement.
   
   This may seem like a fruitless activity, but it is hard to say where a theft occurred. A credit card skimmer can be as simple as attacking a magnetic strip to a computer. It’s possible to attach these devices to common points of contact, so that the several people may fall victim to the scam in the same location. With a high enough volume, law enforcement can see the pattern and take action.
3. Contact the major credit monitoring bureaus.
   
   All of the three main bureaus (Experian, Equifax,and Transunion) perform the same function. They gather the information on you and your transactions that become the basis of your credit score. The credit score is the basis of whether or not parties will extend credit to you—without it, it’s difficult to get a loan or buy a house. Your behavior builds trust. Fraud is someone else acting in your name, and usually running it through the dirt. Explaining that these actions were not yours goes a long way in repairing those scores.

It’s most important, though, not to feel shame about the fact that the fraud occurred. Criminals rely on inaction. Be bold enough to explain what happened.

Charged with Credit Card Fraud

Of course, with this broad a statute, it’s possible that you could be charged with fraud as well. If you misrepresent your income in applying for a card, for example, you could be charged with fraud. The more common cases involve the accusation of stealing numbers, mishandling information, or holding the card as collateral for a debt (a practice sometimes engaged in by landlords). All of these amount to fraud.

Because Arizona’s laws are complex, it is best at that point to find an attorney. Make sure you find an attorney who is competent in the nuances of the law. It’s important to come into any legal battle well supported.

Wider Implications of Credit Card Fraud

Our present context provides plenty of opportunities for credit card fraud, and it’s important to understand the risks to properly navigate the problem.

For example, fraud rose precipitously during the pandemic. Why? In short, because of online shopping. While home burglary dropped because everyone was home all the time, that opened the window for more opportunities to steal information from more websites.

In addition, the risk of being defrauded increases with age, though it is remarkably common across generations. According to a study by Ascent, 33.1% of Millennials have been the victim of credit card fraud. But the number rockets to 42.6% of Baby Boomers. That level of exposure calls for increased vigilance.

But the victimization isn’t only monetary. According to a study by the Identity Theft Resource Center, over half of victims reported an increased sense of powerlessness following a fraud. A lack of power leads to many problematic mental health side effects, and often depression. Credit card fraud is in no way a victimless crime.

Credit Card Fraud and You

The good news is that despite the risks and despite the widespread increase of credit card fraud, most individuals will have their money restored. Credit cards remain a system that protects against large scale theft. Remember, it is the company that is on the hook for any loss, and so they are motivated to restore the money to you as quickly as possible.

With a little understanding, even if credit card fraud cannot be totally avoided, your risks can be reduced.