Card Fraud: How Much Do You Protect Your Hard-Earned Money?

Card Fraud - dannywilde -
How soundly do YOU sleep?

If you’d rather listen than read, click the link:

Audio Card Fraud

“Sorry, but your card has been compromised …”

Millions and millions of Americans have heard or seen those words in the past year or so.  And those words conjure up all sorts of fears:  empty bank accounts, new car loans, unrecognizable credit card accounts, maybe even a new mortgage in their name.  And, eventually, the possibility of an undeserved bankruptcy.

In fact, combining identity theft with all other sorts of fraud, total losses reported by American consumers reached over $1.6 billion in 2013, according to the Federal Trade Commission.

The question becomes this: with card fraud, data breaches and general identity theft as prevalent as they are, what can be done about it?

Financial Illiteracy blue squiggle
One of my mentoring clients told me a story that I’d like to share with you.

Risky Business

Kristin was on a business trip recently, which included attending a trade show where purchases were being made from vendor after vendor.  During the course of several days, she watched her debit card being swiped on little squares at the top of smart phone after smart phone.  No control over whose phone it was.

“Would you like me to email you a receipt?” they’d ask.

While away from home she was accessing the internet through her hotel’s wi-fi.  Knowing she’s “tempting the internet devil’ when she’s on unsecured lines, there are certain tasks she won’t even consider.  Accessing her bank accounts is one of them.  But she does get daily text messages with her bank balances, so she can keep tabs no matter where she is.

By Day Three, she said she could no longer reconcile the balance in the text message.  She desperately wanted to go into her accounts online, but instead drove to a branch of the bank and asked them to pull up her accounts.  Receipts and notes in hand, she checked through and found that an automatic payment had simply been deducted early.  All was well.

(In fact, the visit to the bank made Kristin realize that particular deduction was coming earlier and earlier each month.  And she discovered the company thought months all had 28 days, so was billing in 4-week cycles.  Surprise, surprise!  That meant one extra payment per year!  Needless to say, she called the service provider as soon as she got home, got a refund for extra charges and cancelled that service.)

Back to Kristin’s bank accounts.

Relieved at being able to reconcile her numbers once she saw her accounts at the bank, she finished up her trip.  And, once home, she went back to her normal surveillance routine, one we had developed where she monitors her balances daily.

Limiting Exposure 

Kristin has two debit cards that she uses, one for business and one for personal spending.  Those accounts are in a bank by themselves, where there is no link to other funds.  She moves in what she’s budgeted for the month, and draws down.  That one gesture allows her to sleep at night, making internet purchases and online payments with the knowledge that—even in the worst case—the losses would be limited.

And, as for identity theft, she’s a great believer in identity theft protection services and credit monitoring.

A couple of days after getting home, Kristin said she was checking an online account and noticed something strange.  A tiny debit, under $2, had been made and credited back within the same day.

The next day she saw odd debits in larger and larger amounts.

She called the Card Fraud Department of her bank immediately and had the card shut down.  (They reversed the charges while they investigate the fraud.)

How Some Card Fraud Works

They explained how some of the card fraud takes place.

Sometime during her trip, someone had likely gleaned enough of her information to try to withdraw from her account.  They tested it with a small debit.  So as to continue undiscovered, they credited it back so she couldn’t detect it without looking at the actual account.

Once they knew they had gotten in and completed a transaction, they sold her information to anyone who would pay for it—hence the sudden deluge of debits.

What’s the moral of this story?  Actually, there are two.

Moral #1:  Even if you are someone who has systems set up to monitor for fraud and who thinks she’s pretty protected, everyone is susceptible to card fraud and identity theft.

Moral #2:  Unless you are someone who knows her numbers, checks her balances and reconciles her accounts regularly, the amount of damage done can be extensive.

Fortunately, because of Kristin’s comfort level with her numbers and her respect for her money, she caught the card fraud early.

What about you?

Without disclosing any details, let us know in the Comments section below how much care you take to keep your money and your financial identity safe.


Bio: Sharon O’Day fixes financial lives. She is a tell-it-like-it-is money expert with a successful career in global finance, plus an MBA from the Wharton School. Today she specializes in getting entrepreneurial women over 50 back on their game so they can have more money, less stress and more joy. With her “Over Fifty and Financially Free” strategies, they take actions that lead to their ultimate goal: financial  peace of mind.

  • Jacquelyn L Gioertz

    This is a really good reminder to stay on top of things. Thanks for the tips on how to keep yourself protected.

    • Thanks to Kristin (not her real name) for being willing to share this incident. We get so comfortable with new technology and don’t realize it’s just one more way to access our critical information! Glad it is helpful to you, Jacquelyn!

  • Tina Ashburn

    My business debit card was hacked last week. As you said, a small amount at first, then more and more, and eventually almost $3,000. I found the fraudulent transactions BEFORE they were funded by Visa, and the bank thought, because I had reported them as fraud (and yes, they closed the account and refunded the money) that VISA might not even fund them.Wrong. VERY WRONG. As a result, the account went into the hole, but the bank paid all of the outstanding checks and bill-pays (charging $35 each and yes, refunding those too). But the bad guys were really clever. They processed 2 charged in the same amount. So when the fraudulent charges were returned, those 2 were not included in the deal. I had to get a supervisor (which, by the way, I managed to find by going to their facebook page and typing a complaint — didn’t take long for me to hear from upper management!!) for them to figure out that there were still 2 transactions that had not been put through the system. How did this happen? Probably Target. I’ve never used that card for Square. I don’t shop online. But I did visit Target last fall. Can we be too safe? No. Must we be diligent? Yes, every single day. Thanks, Sharon, for this vital reminder.

    • Immediate action is key, as you know, Tina! And you only know if you monitor your money closely. We hear that data from millions of cards gets taken, but don’t hear what form the fraud takes. Thanks for sharing your experience, especially the importance of getting every single transaction put through the system. The other side of the issue is to keep a close watch on credit reporting, to be sure nothing else gets ‘birthed”!

  • Connie

    I’ve had this happen to me twice over the years. Both times I was able to catch it early but I learned then just how important it is to pay attention!

    • And with each new technical “make-it-convenient” gadget that becomes available, it ups the ante! Glad to hear you monitor carefully, Connie, congratulations!

  • Roslyn Tanner Evans

    I am not vigilant on a day to day basis. I review charges when my statements come. Will see if I can add more checks and balances. Recently had the opposite experience. I made a large charge for a service during my very busy show season and my head was filled with a zillion different tasks. When credit card bill came months later, did not recognize name nor could hubby or Ithink what we did for that amount. I notified credit card company it was fraudulant. Again 2 more months passed and a package came for me to review. It was all the documentation from the realtor supporting the claim. Then memory was jolted & restored. Immediately called credit card co to say charge was valid. Person who sent me documents did not give her extension, so I had to explain it to someone else. I apologized & was told no need to apologize or do anything. Then called the service co to explain & apologize. Was told the same thing. Another month has passed and I expected charge to show up. It hasn’t. This was my mistake and despite my efforts to straighten it out, it doesn’t seem like I’m succeeding. Made more calls but can never get to proper person. Will wait, watch & try again.

    • Ah, Roz, leave it to you to have a “good news” story on a “bad news” topic! I love it! I know you know that someday it could still reappear … although I admit I had something similar occur and, despite all my efforts, it’s been years and nothing. It would help if we got “Case Numbers” or something that created a trail when we accessed customer care, but not everyone is set up that way.

  • fredmcmurray

    I’ve decided only to use cash.

    • Fred, I’m tempted to move to a little island somewhere where they use coconut husks or cowrie shells! 😉

      • fredmcmurray

        Actually that is my goal in life…retire to a tropical island:-)

  • Kung Phoo

    Great article! It’s scary how quickly someone can access all of your information. Being as careful as possible is extremely important!

    • The level of sophistication is incredible, Robert … they leave us in the dust!

  • I admit, I am not as diligent as Kristin. This is a great article Sharon. Great info to think about!

    • She’s amazingly diligent as you say, Lynn, and I’m proud of how she handles her money!

  • Scott Glaze

    I check my balances and debits regularly (every other day) but do not restrict myself to secure internet lines. Great post!

  • Heather Cameron

    Sharon – A great story that we can all learn from. What you can do on a mobile phone these days really scares me from a security point of view.

    • Each new development seems to open us up to more and more INsecurity, Heather! You’re so right about mobile devices …

  • Meryl Beck

    Great information. Being diligent about keeping up with your purchases and credit card information is very important. We tend to take it for granted until it happens to us. This happens so quickly it’s scary and such a shame.

    • In an instant, Meryl! And for people who don’t monitor things, they don’t know until something bounces and by then the damage has spread far and wide.

  • Nate Leung

    Hi Sharon – I believe, you can never be too careful these days. That’s really scary!

    • Yes, it is scary, Nate. No one can be totally safe without withdrawing from commerce entirely these days, but there IS so much we can do to lower our risk.

  • Martha Giffen

    Great post! I have been the victim of fraud on my card. It was several years ago and was finally traced back to a restaurant where the waiter had taken my card. I now check EVERY SINGLE DAY my bank account and am more than a little careful about who I hand it over to. This is a VERY IMPORTANT service you are doing by educating people to WATCH their numbers.

    • I have that same nagging feeling as I hand it over in restaurants, slide it in gas pump slots, etc. There are so many devices developed especially to strip information from our cards. Maybe someday we’ll catch up with the Europeans and the rest of the world and switch over to chips, instead of strips, which are so much safer.

  • Carmen M Perez ELO

    Great info and something to be concerned about. I get very uneasy and pay as much as I can with cash…hard for business tracking yes I know but I don’t like giving so much information away. Thanks.

    • Nice to hear you’re careful, Carmen, and trying to stay out of harm’s way! In a way, it’s all part of lifestyle, isn’t it? Who needs to add that stress to theirs? 😉

  • Maggie DeGennaro

    Great information Sharon. This is our world today…

  • Alexandra McAllister

    Oh, I’ve had this happen and it is scary for sure! I do my best to pay cash or use my debit card. Great post! Thanks, Sharon.

    • Thanks, Alexandra, glad to see you’re taking measures to keep your finances safe!

  • Great tips here Sharon! Awesome sharing!!! Tons of value here!!! Good to know!!

  • Veronica Solomon

    I recently had my card information stolen and several attempts made while in Florida. The strange thing is I had my cards with me at all times and left them at my friends home (where they were safe) throughout my trip. The only time my cards could have been compromised was on my way to the airport or while I was at the airport. I found out later that scammers can actually get your card information from the magnetic strips by being close to you. That must have been how that happened in my case. My bank refunded the charges that did go through and fortunately caught some of the activities before they posted. These crooks will stop at nothing to get to your hard earned money. Greed is such an ugly thing!

    • Veronica, I wrote about that in March 2013 in this article: Especially for those of us who travel at all, RFID-safe wallets are important. That article should show you a solution for the future. But I’m so sorry it happened to you; makes you feel really vulnerable if you’re not even safe walking through airports!

  • Lorna Tedder

    Great information, Sharon. I was in multiple conversations in the last week with different social groups where the suddenly overwhelmingly common occurrence of card fraud and hacked accounts was discussed. The overall feeling in all these groups was that it’s not if but when…and how can we protect ourselves.

    • Lorna, we can expect to remain in the ‘tag’ game of improving security and then watching the hackers catch up and pierce it. So, as you say, we’ll be touched by card fraud at some point. We just don’t know where or when.

  • Pat Moon

    Very good info in the article. It does seem we are hearing of more and more credit card fraud happenings. Fortunately we have not had this happen for several years. I believe staying on top of reconciling and knowing the numbers helps catch anything going wrong quickly. Its interesting, several years ago, I noticed that one of our credit card due dates was different each month. After being charged a late fee one month, I called them. They based their billing cycle on a 28 day cycle which meant that was the reason I was late. The due date changed every month … we no longer do business with that company.

    • Pat, Kristin went back and checked: it said the fees were “monthly.” Just proves that we need oversight over all aspects of our finances … regularly.

  • Susan Schiller

    I admire the woman whose story you shared here. She’s on top of her numbers. I used to check every day, but I’ve let it slip… regretfully, I need to shore up this area. I have experienced card theft, without having lost my physical card – and in the wake up it, I began using credit cards instead of debit cards for online and offline purchases. I’ve never had an experience of my credit cards being stolen – only debit cards. It makes me wonder if debit cards are somehow less secure?

    • I believe many banks have upped the support and protection they offer to debit cards when it comes to fraud, Susan. It used to be really minimal. But I also believe credit card companies will go further in terms of protecting any purchases one has made. So it’s important to look at and weigh all the costs and benefits of them both …

  • Lynn O’Connell

    Call me paranoid, but I check balances on accounts with cards daily. I’ve had cards compromised and the credit card issuers caught it quickly. Still, I’d rather spot it BEFORE it turns into a nightmare.

    • Ditto, Lynn, daily! In addition, I get daily notification of all bank balances, plus alerts of activity over a certain figure. I don’t know that it’s paranoid. To me it has become a comfortable (and comforting) habit.

  • That would be really scary!!! I know my hubby and my sister and even myself has had our debit bard compromise but as soon as the thief tried to take the money the bank blocked it out. After hearing the story I will have to be sure to check for those small charges that gets debited and then credited back.

    • Now that we hear that millions of people at a time have their personal data compromised by retailers, for example, it will become more and more “normal” to hear about compromised cards, Marielle. It just means we need to keep a closer eye on things … 😉

  • Tereza

    It is becoming very common and it is really scary! Being cautious and limiting exposure is the only way to reduce the chances of living this nightmare!

  • This is a great reminder to keep a regular check on my cards and balances. I’ve heard too many horror stories similar to this, not too. I think the card owners are becoming more cautious too because one of my credit cards can only be used 3 times in a day and then I have to confirm I made those purchases before I can use it again.
    It can be a bit irritating on occasions, but it’s a great safeguard.
    Thanks for your wise words as always Sharon.

    • My bank contacts me when one particular foreign transaction occurs, even though it occurs monthly. The bank’s tight fraud formula considers that party a threat because of that company’s outdated payment system. As you say, Carolyn, it might be a bit irritating, but I’m glad the bank’s tight filters are there to keep me safe!

  • Ouch, Sharon, guilty. If only I could use cash in all instances. My credit card company will call me within minutes when unusual transactions are effected but there is a lot of leeway for definition, is there not? Thanks for shaking me out of my comfort zone!

  • Klaudia

    I check balance daily – JUST in case. Set up alerts over certain $. And if something doesn’t look right, I call/visit my bank to make sure what’s going on. Do I feel safe? no I don’t because I know there are many people with their software that can do a lot of damage.

    • I do the same, Klaudia. And, because of my international travels, I placed a tight leash on my accounts with my bank’s fraud department. I wish it didn’t have to be that way, but unfortunately it is necessary …