This article is part of a larger series on Best Small Business Credit Cards.
People might think using a personal or business credit card is safe, but credit card fraud is a major global and national problem. Although some people skate by without ever dealing with fraud, these seven alarming credit card fraud statistics goes to show how prevalent it is in our world.
1. Credit Card Fraud Losses Reached $27.85 Billion Worldwide
Credit card fraud spans further than just in the United States. As a matter of fact, in 2018, card fraud losses reached $27.85 billion worldwide. This is an increase of 16.2% from $23.97 billion in 2017. Not only is a 16.2% increase in fraud losses a major jump in a single year, but if we look at projected losses, it gets even worse. The Nilson Report projects that, by 2023, credit card fraud losses will reach $35.67 billion worldwide, which is a 28.08% increase from 2018.
2. The US Accounted for 34% of Global Fraud Losses in 2018
Credit card fraud is not a rare occurrence, but it’s particularly prevalent in the US. Americans were the victims of 34% of the world’s credit card fraud in 2018. What’s more, the US accounted for 47.3% of card fraud losses in 2012. Fortunately, that represents the highest percentage between 2000 to 2018, so we can take some comfort that we’re seeing a downward trend.
3. Credit Card Fraud Makes Up 42% of Identity Theft
In 2019, there were 650,572 reports of identity theft, with 271,823 reports linked to credit card fraud—or about 42%. This makes card fraud the most common type of identity theft in the US. Falling just after card fraud, the Consumer Sentinel Network Data Book reports loan or lease fraud as the second-most common type of identity theft. Phone or utilities fraud is the third-most common.
To be clear, credit card fraud happens when someone gains access to your credit card information and makes an unauthorized purchase. Meanwhile, identity theft happens when someone steals your personal information to use your identity for their purposes. In the case of this credit card theft statistic, someone could steal your information to open a new card under your name.
4. New Credit Card Account Fraud Increased by 88% In 2019
Not only is credit card fraud a major global and national issue, but some aspects of it are also continuing to rise. For instance, in 2019, new account fraud increased by 88% when compared to the previous year. Compare that to existing account fraud and, fortunately, you see a 4% decrease from 2018 to 2019.
You may also know new account fraud as account opening fraud or account origination fraud. This is when fraudsters use stolen or fake identities to open new credit cards. Their number one goal? Max out the card’s limits as quickly as possible, typically within 90 days. To safeguard you from this happening, the Association of Certified Fraud Examiners (ACFE) disclosed 15 red flags that banks can look out for when a customer is opening a new account.
5. Younger People Report Fraud Losses More Often
Some age groups report fraud losses more often than others. For example, in 2019, 33% of people ages 20 to 29 reported a loss due to fraud. That’s 20% more often when compared to people ages 70 to 79. However, just because those age groups reported fraud more often doesn’t necessarily mean they lost the most money. When you look at people aged 70 or older, the median loss was much higher.
The Consumer Sentinel Network Data Book reports people ages 70 to 79 had a median loss of $800 in 2019. Furthermore, people aged 80 and older had a median loss of a whopping $1,600, which is a 100% increase when compared to people ages 70 to 79. Take that number and compare it to people ages 20 to 29―their median loss was only $448.
6. California Reported the Most Credit Card Fraud in 2019
While credit card fraud is a national issue, it varies drastically by each state. California’s card fraud, for example, made up 51% of its 101,639 identity theft reports in 2019, making it the state with the most card fraud. That’s 51,836 credit card fraud reports in just one year. Coming in right behind California are Florida with 33,069 fraud reports and Texas with 27,207.
However, as I mentioned, card fraud truthfully varies from state to state. For instance, Wyoming is the state with the fewest fraud reports in 2019, with only 108 reports. Right after Wyoming, there’s Vermont with 145 reports and South Dakota with 160.
I calculated the fraud per state by multiplying the total fraud reports for each state by the percentage of card fraud that made up the specific state’s identity theft reports.
7. Major Card Companies Have the Most Fraud by Card Type
Global card companies, including Visa, Mastercard, American Express, and Discover, experienced the most fraud losses by a longshot. These global brands reported losses of $24.86 billion in 2018. Credit card and debit card transactions at nonglobal networks reported the second most fraud by card type with $1.58 billion in losses—or $23.28 billion less than the global card companies. Domestic and private label cards also report fraud losses. Together, however, they only amount to $1.41 billion in losses.
What Is Credit Card Fraud?
Credit card fraud happens when a thief or fraudster steals your credit card or your card information to make unauthorized purchases or cash advance. Card fraud is common across the world, so it’s crucial to understand how to avoid it and what to do if you’ve been hit by a fraudster.
Cash advance: A short-term cash loan you take against your credit limit by withdrawing money at an ATM or bank. Cash advances are expensive as they typically charge a fee between 3% to 5% of your withdrawal amount.
How to Avoid Credit Card Fraud
Although fraud is a surging issue, there are a handful of tactics you can use to avoid personal or business credit card fraud. Here are some easy ways to help prevent card fraud in your life:
- Sign the back of your new credit card immediately: When you sign the back of your card, you make it difficult for someone else to erase your signature or cover your signature.
- Separate your cards and cash: It’s common to carry your cards and cash together in the same wallet. However, if your wallet is stolen, so are both of those belongings. Keeping your cards in a safe and secure place can help you avoid fraud.
- Report a lost or stolen card immediately: If your card goes missing, report it to your issuer right away. This will make sure no unauthorized purchases are made. Some issuers even let you lock your card online or through the mobile app.
- Only use your card on secure and trusted websites: Before using your card online to make a purchase, make sure it’s a secure site you trust. Secure site URLs start with “https://” and have a lock symbol in the search bar.
- Monitor your transactions daily: Make it a habit to check your credit card transactions every day. This will help you catch any suspicious activity. If you see a suspicious transaction, report it immediately.
What to Do If You Have Credit Card Fraud
You would never wish to experience fraud. However, credit card theft statistics show there’s a chance it may happen to you. If you have credit card fraud, follow these five steps:
- Call your credit card issuer immediately.
- Change your passwords to your online banking account.
- Request a credit freeze from each of the three main credit bureaus.
- Keep an eye on your statements for a few months after the fraud happened.
- Request a copy of your credit report and report any fraudulent errors.
While these credit card fraud statistics are alarming, it doesn’t mean that fraud is unavoidable. You can escape the global fraud problem by following common preventative tactics, such as reporting suspicious activity or a lost or stolen card immediately. You deserve financial security.