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The Federal Trade Commission (FTC) reports that credit card fraud has become the most common form of identity theft, with 390,000 cases reported in 2021, and 118,191 in the first quarter of 2022 alone. However, a recent investigation by BuzzFeed News allegedly revealed that the two dominant credit card companies, Visa and Mastercard, do little to protect customers regarding consumer fraud, prompting Congress to consider legislative action against the credit powerhouses.
The year-long investigation into the credit card companies allegedly determined they shy away from shutting down consumer fraud on their networks, even with the knowledge of which businesses are committing fraud. Together, Visa and Mastercard are the top two credit companies in the United States, processing a combined 75 percent of all credit card payments. According to the investigation, the companies allegedly continue to move money for businesses with extensive fraud records and histories of lying to customers and banks and breaking the law. Visa and Mastercard are accused of looking the other way in order to continue collecting a percentage of each company’s sales, essentially allowing the companies to continue defrauding customers for years.
BuzzFeed News utilized tens of thousands of court records, confidential investigative reports, internal company records, over 120 interviews, and secret recordings. Visa and Mastercard have the ability to block businesses with a track record of fraud from using their grids, preventing them from harming customers, along with banks that process fraudulent transactions. However, neither company chooses to do so allegedly. Mastercard, according to the report, even maintains extensive records of companies that faced consequences with other financial institutions for their fraudulent activities.
In response to the investigation’s findings, both Visa and Mastercard claim that preventing flagged companies from using their platforms is not their job, with Visa saying it is not a worthwhile venture that could be circumvented. Mastercard has locked out businesses in the past, but only when those businesses were under serious public scrutiny for their practices. According to the companies, responsibility lies with the customers’ banks.
Unlike other credit card companies who issue cards directly to consumers, Visa and Mastercard do not, operating with banks and financial institutions that supply cards. When fraudulent transactions take place using Visa or Mastercard credit cards, it is the responsibility of the banks to reimburse the customer, not the credit card companies. In this model, they have no responsibility or financial incentive to curb fraud and continue collecting sale percentage fees from businesses flagged for fraudulent activity.
Lawmakers are calling for some sort of regulatory oversight and legislative reform regarding credit card companies. The United States has the highest credit card fee rates in the world, and Visa and Mastercard are urged to not raise the interchange fee rates that would add further financial hardship to Americans.
What Is Credit Card Fraud?
Credit card fraud is the unauthorized use of another’s credit card information in order to make purchases or access cash back or stealing a person’s identity information in order to apply for credit cards. Credit card fraud also includes criminals selling your credit card or personal information to other criminals.
The use of chip cards for in-store purchases have helped lower credit card fraud, but card-not-present purchases, such as online shopping, continue to be a large problem. Methods perpetrators use to access and obtain your information include:
- Skimming: Criminals attach a device to credit card swipers, which grabs the card information from the magnetic stripe during the transaction and transmits the information to a device nearby. Thieves then use the stolen information to create counterfeit credit cards. Skimming can also be used on ATMs, giving them access to your bank account and your money.
- Phishing: The method of phishing theft usually takes place through phone calls or emails. Thieves call or send an email pretending to be affiliated with your financial institution and alerting you to a problem with your account. You are then directed to a website where you will be asked to put in your card information, which is then stolen. Phishing can also utilize keylogging spyware which downloads onto your device if you click on links provided in the scam emails, giving thieves complete access to your device and the information stored.
- Hacking: Thieves use hacking methods for theft on a grander scale, known as a data breach, by typically targeting large banks and other financial institutions and retail businesses and steal credit card information on thousands of customers.
- Card-not-present: In the digital age, card-not-present fraud is especially pervasive because thieves do not need your actual credit card to make online or over the phone purchases, only the card information they have stolen in another manner.
- Accidental: Credit card fraud can also take place when a relative or friend uses your card to make purchases or retrieve cash, either through theft or belief they had permission to use it or charged more than expected.
No matter how the information is used, the end result is the same: you will be billed for the unauthorized charges and will have a negative impact on your individual credit report.
What Should I Do if I am a Victim of Credit Card Fraud?
If you have determined fraudulent activity on your credit card, you have the right to place a fraud alert on your credit report. Doing so informs creditors to take extra steps to verify your identity if someone applies for credit in your name. Contact one of the three major credit reporting agencies, Experian, Equifax, or TransUnion, requesting them to add the alert to your report. You can contact all three, but you can alert only one and they will inform the others.
You also have the right to block the inaccurate fraudulent information from being included in your credit report by creating an identity theft report through the FTC that will be distributed to the credit reporting agencies. Taking this action as soon as possible will limit the damage to your credit report. Fraudulent accounts in your name that are delinquent on payments will be submitted as negative information on your credit report and will affect your ability to secure credit, housing, and/or even employment. You can also request a credit freeze on your credit reports, preventing any further credit accounts from being established in your name.
The best defense is a good offense, so regularly checking your credit report, bank statements, and credit accounts will allow you to identify fraudulent activity quickly. Regularly change your passwords to financial accounts, utilize security features, and use caution when giving your credit card or banking information. If you have been the victim of credit card fraud, freeze all your accounts, cancel your credit cards, request new ones, and contact a lawyer if needed.
Typically, no legitimate communication from any financial institution, bank, credit card company, and more will include requests for your account information, or include a link to another site for you to input the information. If you receive an email, a text message, or phone call asking for your account information, do not respond. Contact the company being represented to confirm whether the communication is legitimate.
Pittsburgh Consumer Fraud Defense Lawyers at East End Trial Group Help Clients Repair Damage From Credit Card Fraud
If you have discovered fraudulent activity on your credit cards, one of our experienced Pittsburgh consumer fraud defense lawyers at East End Trial Group can help you confirm the fraud and repair the financial and personal damage. Call us at 412-223-5740 or contact us online for a free consultation. Located in Pittsburgh, we serve clients throughout Pennsylvania.