Avoiding Credit Card Fraud

Aug. 2, 2004 -- -- For Hayley Sumner, the last 12 months have been credit card hell. The 39-year-old entrepreneur from Los Angeles was hit twice by credit card fraud.

About eight months ago, someone stole her Visa card from her car and charged hundreds of dollars at gas stations and movie theaters.

Then, in June, she went to Belize, where she had phoned in her American Express card information to the hotels and resorts where she intended to stay. The next month, she was hit with hundreds of dollars worth of false telephone charges from Belize to the United States.

"Credit card fraud is just so pervasive, it's ridiculous," Sumner laments. "And I don't really know what you can do to protect yourself, other than constantly second-guess yourself."

Sumner's story is sadly common these days. As the use of plastic continues to replace cash in the United States as the preferred method of payment, credit card fraud also continues to grow.

And criminals are getting more savvy, not only using older methods like stealing statements from the U.S. mail or the cards themselves, but newer techniques like stealing information via the Internet and even cell phones.

Experts say the credit card industry loses about $2 billion a year globally due to fraud.

Though MasterCard and Visa do not make public how much is lost to fraud on their cards each year, they said it equates to approximately 7 cents of every $100 transacted.

The Federal Trade Commission, in a report on identity theft released in late 2003, said one of the largest categories for identity fraud was the misuse of new or existing credit card information. Some 6 million people experienced credit card fraud in 2002 alone, the commission added.

Credit card fraud is as varied as the criminals conducting it. Here are some of the major ways it is committed.

Lost and Stolen: Loss and theft of credit cards is still the most common way credit card crimes are committed, accounting for 50 percent of credit card fraud at J.P.Morgan Chase & Co., one of the largest credit card issuers in the United States, notes Chris Conrad, senior vice president for fraud management at its Chase Credit Cards division, based in Wilmington, Del.