How does debit and credit card fraud happen?
From phishing emails to fake phone calls to skimming cards, there’s more than one way a fraudster can commit debit or credit card fraud. In general, however, debit and credit card fraud occurs when your card or card information is stolen and used to make payments that you didn’t authorize. Although new tech, like chip and tap, help to keep our financial details more secure, fraudsters are constantly coming up with new scams that you should be aware of, such as SIM swapping, which could give them access to your money and more.
What is SIM swapping?
A SIM (Subscriber Identity Module) card is the small removable chip found in your mobile phone. It identifies you as you, and gives you access to your phone company’s network.2
But how can this be used for fraud? By collecting your name, phone number and other personal details (through phishing emails and other methods), fraudsters will reach out to your cellphone provider claiming to be you and request a new SIM card. With the new SIM card, the fraudster can gain access to the various services and information stored on your phone, including emails, text messages and even your bank accounts. Often, a victim of SIM swapping won’t realize that they’ve been targeted until they are unable to send a text or make a call.2
How can I prevent debit and credit card fraud?
It’s vital that you do all you can to keep your information safe. When it comes to your credit and debit details, you can help protect these by:
- Hiding your PIN. If you’re asked for your PIN when making a transaction, be sure to cover your PIN as much as possible as you enter it.
- Not sharing your card details with others. You should always know where your cards are and what they’re being used for. Lending your card or information to someone else can make you vulnerable.
- Regularly reviewing charges made to your card. You should check your payments frequently to ensure no unauthorized charges have been made. Many banks also provide alerts when transactions are made and some can even send you a text message when they suspect a fraudulent attempt on your card. Keeping a close eye on what is being bought with your card will allow you to take quick action if anything fishy pops up.
- Shredding documents. If you’re planning to throw out financial documents (or an expired credit card), shred them first to protect any details listed on them.
- Using only secure websites. Only make online purchases through websites you trust. Look for “https” at the being of a site’s URL – this signifies that the website is secure.
- Avoiding public wifi. These networks can be used by many individuals at one time and can potentially open up your information to others.
- Minimizing the sharing of personal info online. It’s easy to overshare on social media, but posting certain details (like your date of birth) can expose answers to security or authentication questions.
- Picking stronger passwords. Just like creating a PIN that doesn’t contain personal numbers (such as your birthday), make sure your passwords are also hard to guess. This goes for more than just your online banking password. Many online shopping sites now allow you to save your credit card details for faster checkout, which means these accounts also need more secure passwords.
- Taking extra security steps. Setting up additional security steps, like two-factor or
two-step verification, can help to add another layer of privacy to your info.
How do I report debit and credit card fraud?
If you have lost your card or suspect that you’ve been targeted by debit or credit card fraud, here’s what you’ll want to do: 3,4
- Freeze your accounts as soon as possible – some banks allow you to do this directly through their mobile apps.
- Inform your financial institution about the lost card or suspected fraud. They may cancel your current card and issue you a new one.
In the case of fraud specifically, you’ll also want to: 3,4
- Report the case to your local police.
- Notify any other services that could be impacted by potential fraud, such as your phone company.
- Report the incident to the
Canadian Anti-Fraud Centre.
- Ask Equifax and TransUnion (Canada’s two credit reporting agencies) to place a fraud alert on your file and for copies of your credit report. Review and monitor your credit reports and flag any inaccuracies.
How am I covered for debit and credit card fraud?
If someone has used your debit or credit card without your authorization, your card issuer will typically reimburse you for the full amount lost as long as you took reasonable care to keep both your account and PIN safe.5 For example, Visa, MasterCard and American Express all have zero-liability policies when it comes to unauthorized transactions, which means you’re not responsible for fraudulent purchases made on a credit card issued by your bank.6
Your standard home policy also usually includes some coverage if you are legally required to pay charges made to your credit or debit card due to theft or unauthorized use. This coverage will likely be limited to a set amount and will not apply if the charges were made by someone in your household or by someone with whom you have entrusted your card.
Be sure to review your home policy in detail to see if you have this coverage and to learn when it applies and to what limit. Also, get familiar with the terms, conditions and policies of your debit or credit card to understand your rights and responsibilities.