February 12, 2024

Guarding Your Finances: How to Help Prevent Credit Card Fraud and Identify Theft

During the first three quarters of 2023, a staggering 805,000 individuals fell victim to identity theft. However, this pervasive issue extends beyond just a small subset of the U.S. population, posing formidable challenges and risks for millions. Today, safeguarding your financial well-being and personal information is more critical than ever.

Credit Card Fraud vs. Identity Theft: What’s the Difference?

While closely connected, there are distinct differences between credit card fraud and identity theft:

  • What is identity theft? This occurs when individuals wrongfully acquire and exploit another person's personal information, going beyond financial data to encompass various aspects of an individual's identity. Criminals may use stolen information for purposes like opening new credit card accounts or applying for loans.
  • What is credit card fraud? A specific subset of identity theft, it happens when unauthorized individuals exploit credit cards for purchases or withdrawals without the cardholder's permission, involving the illicit use of credit card information for financial transactions.

How Prevalent are Credit Card Fraud and Identity Theft?

A recent report indicates that these crimes exceeded pre-pandemic levels in 2023:

  • In 2022, there were 1.11 million reported cases of identity theft.
  • A new instance of identity theft is reported approximately every 22 seconds.
  • Those in the 30-39 age range report the highest levels of identity theft.
  • Bank fraud and credit card theft were the only two types of identity theft to grow from 2021 to 2022.
  • Credit card fraud is the most prevalent type of identity theft across all age ranges and states, accounting for 440,666 reports annually.
  • Evolving tactics, such as phishing scams and the rise of metal credit cards, contribute to the persistence—and growth—of credit card fraud.

What are the Different Types of Credit Card Fraud?

While various types exist, including application fraud, account takeover, or lost card fraud, all instances fall into one of two categories:

  • Opening a new account under your name: Identity thieves exploit personal information to open credit card accounts in your name, using methods like leveraging tossed junk mail and phishing tactics.
  • Exploiting a current credit card account: An identity thief uses a credit card that someone opened, racks up debt, and disappears, leaving victims to deal with the financial repercussions.

In all instances, the financial repercussions of credit card fraud can be devastating, even with fraud protection. According to the Identity Theft Resource Center, 26% of those who experienced credit card fraud resorted to borrowing money, 22% had to take time off work, and 15.3% had to sell possessions to cover expenses.

How Does Credit Card Fraud Happen?

  • Credit cards offer convenience but also opportunities for fraudsters to employ various methods for scams or fraud:
  • Theft of physical credit card: Criminals may steal a physical credit card by pilfering through the trash for discarded preapproved credit cards or old cards.
  • Data theft: Fraudsters employ techniques such as skimming, scanning, or stealing physical documents to acquire enough personal information to open a new card in your name or get current credit card data.
  • Credit card scams: Phishing involves email scams leading to fake login pages; impersonation that includes phone or email scams where fraudsters pretend to be legitimate entities; or fake organizations soliciting card information for non-existent charities or businesses.

How to Help Protect Against Identity Theft and Credit Card Fraud?

Securely dispose of sensitive documents and old credit cards by using a professional shredding service. Tossing old credit cards, statements, documents, and junk mail directly into garbage or recycling bins might be the easiest thing to do, but the U.S. Department of Justice warns it is a high-risk way of getting your identity stolen. To help protect against credit card fraud and identity theft, you should shred all documents that contain personally identifiable information (PII), including:

  • Junk mail: "Pre-approved" credit card offers, insurance mail and other offers found in the mail contain valuable PII, such as names and addresses.
  • Old credit cards: Cut credit cards can expose unchanging credit card numbers, allowing thieves to piece together information.
  • Bank statements and bills: These documents contain PII that could facilitate unauthorized access to bank, phone, or other accounts, enabling identity theft.

How Do Shred-it® Services Contribute to Fraud Prevention?

To further reduce the risk of fraud, opt for professional shredding services. Shredding is one of the most secure ways to dispose of unneeded or unwanted documents and items containing personal information.

Secure document destruction services, like Shred-it®, offer fast and convenient options, including:

  • Residential shredding: Shred-it® collects documents from residences.
  • Drop-off shredding: Drop off your documents at your local Shred-it® office.
  • Free shredding events: A community Shred-it® event is often free to residents to bring a box or two of confidential papers for secure destruction.
  • Shredding old credit cards: This negates the temptation to simply cut them up and put them in the trash.

Learn more about how Shred-it® can help protect against credit card fraud and identity theft with professional document and specialty shredding services.