What You Need To Know About Fraud Right Now

Fraud is a frightening and growing occurrence in our society, which requires you to stay educated about current trends.

With the convenience and popularity of our online presence, it has opened the floodgates for fraudsters to expand and perfect their scams . In 2023, the Federal Trade Commission (FTC) reported that consumers reported more than $10 billion in fraud – a 14% increase since 2022 – and the highest ever loss reported to the FTC.  Fraud techniques have reached a new level of sophistication, often making it difficult to spot them, which is why it is so important that you stay up to date on the most common types of fraud and what you can do to protect yourself and your accounts. Below, we’ll dive into the three most common types of consumer fraud.

Credit Card Fraud

Nowadays, credit and debit card transactions are more common than cash in the United States. This gives digital criminals all the opportunities they could have to commit credit card fraud. And every year, they succeed at least some of the time, with 52 million Americans experiencing credit card fraud last year.

 Below are some of the most common methods for stealing credit card numbers:

• Phishing and Smishing: Phishing occurs when cardholders are tricked into divulging personal information like passwords or credit card numbers, often through misleading links in text or emails.
  

• Skimming—A skimmer is a device installed at card readers or payment terminals that collects card numbers. Skimmers are often found at an ATM or gas station, installed over the existing hardware, and can be difficult to spot because they blend in or match the style of the payment terminal.

• Hacking public data through malware of public Wi-Fi signals.

• Accessing personal information leaked through retailer and service provider data breaches.

Establishing good habits is key to protecting yourself from card fraud. Here are a few practices you can apply to your daily life to reduce your chances of experiencing credit card fraud. 

•  Avoid connecting to public Wi-Fi networks, especially when accessing accounts or submitting online payments. This includes those offered by merchants and at airports. These networks are convenient but are not monitored or secure, creating the perfect environment for a fraudster to gather your personal data and account information. If you need to connect your laptop or other device to the internet, use your phone’s hotspot to ensure a secure connection.

• Reduce the amount of personal information you share with online services, and don’t save credit card number or bank account information with e-commerce sites. Sure, the temptation is strong because it makes online shopping check-out effortless (and doesn’t require you to get up from the sofa for your wallet) but by storing this information on their server, your chances of having that information stolen increases infinitely if their site is ever hacked.

• Use a digital wallet. Adding your payment method to your phone's digital wallet might not seem like the most secure form of payment, but the reality is that it offers additional protections that card terminals and readers don’t have. Cards saved in a digital wallet automatically incorporate authentication, and their contactless NFC technology transmits encrypted tokens rather than account information, making them safer to use (and harder to lose) than physical cards. This is precisely the reason why if you have ever returned an item you paid for using your digital wallet, you probably don’t recognize the last four digits of the card number. Additionally, digital wallets are not subject to skimmers and they are protected by a password you created or your biometric identification.

• Utilize digital tools to easily spot fraud. Online banking is a no-brainer when it comes to spotting fraud early on. If you are still getting a paper statement once a month, not only are you at risk of someone stealing it from your mailbox, but you also risk the inability to identify fraud as soon as it happens. Education First FCU’s online banking offers 24/7 account access, including pending charges that may have occurred after business hours. Additionally, we offer free Card Management, which allows you to set up notifications for card transactions based on location, amount, transaction type and the ability to locate your card if it is lost or stolen. This tool can also be used to help with budgeting by setting up monthly and individual transaction limits and alerts. 

Identity Theft Fraud

Identity theft is defined as the unauthorized use or attempted use of an existing account, the unauthorized use or attempted use of personal information to open a new account or misuse of personal information. Most cases of identity theft start with a lost or stolen wallet, credit card information, a data breach, or a computer virus or phishing scam – often via social media networks.

A report commissioned by the American Association of Retired Persons (AARP) documents that American adults lost a total of $43 billion to identity fraud in 2023. That includes $23 billion lost to traditional identity fraud, which affected about the same number of people—15 million—as in 2022 (when the number was 15.4 million). 

Let’s look at a few ways to protect yourself against identity theft.  

• Use secure and unique passwords for every site (banking, shopping, travel, etc.). Never use your name, birthdate or any portion of your social security number for a password. When possible, allow your device to create a secure password for you, using an appropriate mix of upper- and lowercase letters, numbers and special characters. There are a variety of secure password manager apps that you can use to save these and your account usernames.

• Add two-factor authentication (2FA) on all your accounts and use an authenticator app instead of SMS to receive your 2FA codes.‍

• Run a Dark Web scan to see what information of yours may have already been leaked, update passwords, request a new card, or notify credit bureaus.

• Find out if any of your financial institutions or any of your credit cards offer free or discounted identity theft protection. These tools will routinely scan the dark web for the presence of your personal identifiable information (PFi) and send you alerts via email or text if one is discovered. 

• Consider implementing a freeze on your accounts with all three credit bureaus (Experian, Equifax and Transunion). A free security freeze limits access to your credit report without your permission. Having a freeze on your credit report will not affect your credit scores, but it may prevent your credit report from being accessed until you unfreeze your credit report or credit file, so if you know are you are going to open a new line of credit, plan to buy a new vehicle or shop for a home, you will want to make sure you manage the freeze by lifting it appropriately for that timeframe.

Imposter Scam Fraud

In the case of an imposter scam, the fraudsters pretend to be someone trustworthy, such as a government official, a family member, or a representative from a known company, to trick individuals into providing personal information or making payments. Some examples include grandparent, romance and robocall scams​. Scammers also might use telephone spoofing technology to make their number appear to be a legitimate organization and claim they work for the police, IRS, FBI, tech support, a well-known corporation or a charity and will use different scenarios and schemes to try to defraud you.

 To protect yourself from falling victim to an imposter scam, use these rules to ensure your safety.

• Be cautious whenever someone unexpectedly tries to connect with you, asks you for personal information, or wants you to click on a link. Even a text message about an attempted delivery could be a scammer pretending to work for a shipping company. It's always best to look up the organization the person claims to be from and contact it yourself. A legitimate customer service employee or government agent should appreciate that you're trying to be careful.

• Don't share information by phone. Fraudsters are known to "spoof" phone numbers to appear as though a legitimate organization—such as the IRS or your bank—is calling. Be leery of anyone who asks you to share or verify account numbers, your social security or driver's license numbers, credit card numbers or other personal information over the phone. If you're worried that it really is your bank or credit union calling, hang up and call the number on its website instead.

• Be wary of emails or texts from unknown sources. Never click on a link in a text or email unless you trust the source. Emails used in phishing scams often contain clues such as misspellings, low-resolution graphics and email addresses that might differ from the supposed sender's actual address. When shopping online, ensure the website address includes the “https” prefix. Often, fake websites are set up to mimic the look of popular retailers, and they may even look exactly the same, which is why checking the website address or URL is important. 

Fraud is a lucrative business for the individuals that engage in this illegal activity. By staying vigilant and adopting these preventive measures, you can significantly reduce the risk of falling victim to financial and identity fraud. Continue to educate yourself about common scam tactics and stay up-to-date on fraud detection techniques. Securing your personal information by regularly monitoring your credit report and setting up fraud alerts with credit bureaus can further protect you against credit card fraud and identity theft. Remember, staying one step ahead of fraudsters is key to safeguarding your financial well-being and protecting your identity.

 Visit our Fraud Resource Center to learn more about how to protect yourself online and what to do if you become a victim of fraud.