How to Prevent Credit Card Fraud
Federal law caps what you can owe on unauthorized charges. These FTC habits help you spot and report fraud early.
The FTC lists habits that help protect your accounts and catch fraud early. The habits are simple. The law behind them is the reason they matter, so start there.
Why prevention matters under federal law
Federal law protects you from unauthorized use of your credit card. The FTC says you are not responsible for unauthorized charges. This is true if you report the loss before someone uses the card. If you report after someone uses it, the most you might owe is $50.
That $50 is the most you might owe. Regulation Z says a card issuer is not required to impose any liability on a cardholder for unauthorized use of a credit card. Whether you report before or after someone uses the card changes the most you might owe.
Once you report the loss, federal law does not make you pay for charges made without your permission after that report. Every habit below exists to get you to that report fast.
Everyday habits that stop credit card fraud
The FTC recommends these habits.
Turn on multi-factor authentication. The FTC says to protect your accounts. Use multi-factor authentication when it is available. It makes it harder for scammers to log in to your accounts if they get your username and password.
Check your account activity often. The FTC says to check your account activity often. This is very important if you bank online.
Open statements promptly. The FTC says to open your monthly credit card statements right away. Compare the balance and charges with your receipts.
Guard the physical evidence. The FTC says to keep your cards, PINs, receipts, and deposit slips safe. Dispose of them carefully.
Check your homeowner's or renter's insurance. The FTC says to check whether your policy covers you for card thefts.
How to spot fraud early
Compare every statement against your receipts, the FTC says.
The FTC also says to check your free credit reports for accounts or charges you do not recognize. For identity theft, the FTC says to visit IdentityTheft.gov to report it and get a recovery plan.
What to do the moment you notice a charge
Report a lost or stolen card to the bank or credit union that issued it as soon as possible, the FTC says. Reporting the loss is what the law's protection turns on.
Then keep checking your account statements and report fraudulent charges right away, the FTC says.
What the law says if prevention fails
The rules above are the FTC's habits. The numbers below are the law's floor and ceiling.
Report before any use, and you owe nothing. Report after, and you owe at most $50. Report the loss, and you owe nothing for charges after that point. Regulation Z notes these liability rules apply only to credit card transactions.
That last point matters. A debit card runs under different rules. See debit card fraud for how that works. See check fraud for how checks work.
For the broader picture of what this crime is and how it is investigated, see credit card fraud.
The law gives you a safety net, and when you report affects the most you might owe. Check the statements, guard the card, and report the moment something looks wrong.