Credit card fraud is committed when someone obtains goods and services or receives unauthorized funds by using another person's credit card account. The U.S. government and credit card companies have established a variety of laws regarding credit card fraud to protect individuals from having their money and identity stolen.
Identity Theft
Identity theft occurs when an individual has acquired pieces of your personal information with the intent to use it and commit fraud. Credit card fraud is considered the most common type of identity theft, and it can require a lot of time and money to close bad accounts, repair your credit record and generally clear your name. Depending on the scale of the crime, a thief can be found guilty of a misdemeanor or felony and may spend several years in prison.
Truth and Lending Act
The Truth and Lending Act requires credit card institutions to disclose the terms of their credit cards. It's designed to protect consumers against unfair and inaccurate billing practices. If a company fails to disclose its terms to you, it has 60 days to remedy the error or you can file suit in court. Action may be brought against a company within one year of the violation, and companies found to have committed this type of credit card fraud are responsible for paying damages, court costs and statutory damages.
Fair Credit Billing
The law regarding fair credit billing protects consumers from having credit cards charged twice for the same purchase and from having a credit card payment processed incorrectly. Most companies quickly correct these types of errors, but if a company doesn't acknowledge or correct the mistake, it is committing fraud. If you believe this type of fraud has been committed against you, you can sue the credit card company and be awarded up to twice the finance charge and any related court fees.
Card Not Present
The Internet and the U.S. mail are a major source of credit card fraud. Thieves order products from merchants over the phone and Internet, because having a credit card physically present is not required. "Card not present" laws were created to protect merchants and consumers from these practices. These laws allow merchants to verify customers' addresses and use CVV2 data, which is the three- or four-digit number on the back of the card that helps legitimize an order. When they're caught, criminals must return the goods and face prosecution and possible jail time.
Skimming
Skimming is a type of fraud that involves stealing the data off a credit card at the point of sale. That data is then used to create fake credit cards to purchase items. Generally, this kind of credit card fraud is done from an employee within a credit card company who is able to photocopy receipts or use an electronic device to steal credit card numbers from stores. Skimming laws are in place to protect consumers, and the companies that issue credit cards are required to check for this type of fraud and alert the authorities if this crime has occurred. Penalties vary by state, but most convicted criminals face a fine and incarceration.
