How do Credit Card Companies Monitor for Fraud?

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Technology has improved since the time when credit card companies would manually check their books for fraud –  now there are a number of ways they can monitor for fraud.

Credit card fraud is the act of someone using another person’s credit card to make unauthorized purchases. This can happen by someone stealing your physical credit card, memorizing your credit card number and making either online purchases or purchases over the phone,  issuing duplicate counterfeit with the information they get from you magnetically. With the different ways people can still credit card account information, credit card companies have different ways of protecting their customers.

Different ways credit car companies protect cardholders:

  • The basic design of the card. There is a sequence of numbers on the front and on the back near the signature strip. Many secure websites and phone customer service representatives will not validate the credit card charge if all the information cannot be provided.
  • Credit cards come with an expiration date. That date is also required for orders as well as ensuring the card will not be valid forever.
  • Most credit card companies monitor for fraud by carefully watching the behavior of the card holder. They will watch the shopping activity and if they notice any behavior that is out of the ordinary they will freeze the account. Only when the card holder calls back and verifies some personal information, will the credit card company activate the card again. Some behavior that may trigger off a call or a freeze from your charge company is excessive shopping, buying large quantities of electronics or even purchases from another state or country.

If, however, you are a victim of fraudulent charges, there are additional safety nets in place to protect you. Victims of credit card fraud are only legally responsible to pay $50 worth of the charges, according to the Federal Trade Commission.


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