The Federal Trade Commission (FTC) received nearly 390,000 reports of credit card fraud in 2021, making it one of the most common types of fraud in the United States. However, that figure only scratches the surface of the issue.
The Nilson Report, which monitors the payments industry, released a forecast in December 2022 estimating that card fraud losses in the United States will total $165.1 billion over the next ten years, afflicting every age group in every state. According to Insider Intelligence, just one type of credit card fraud — card-not-present fraud, which includes online, over-the-phone, and mail-order transactions — will account for an estimated $5.72 billion in U.S. losses in 2022.
Credit card fraud occurs when someone uses credit card information to make unauthorized purchases, such as on Amazon. Other types of credit card fraud include identity theft and stolen credit cards, in addition to card-not-present fraud. While credit card fraud is a major issue, you can take steps to avoid becoming another credit card fraud statistic.
Credit card fraud types
Credit card fraud manifests itself in a variety of ways. Here are the six most common types.
- Card-not-present (CNP) fraud. Card-not-present fraud occurs when someone uses your credit card information but not your actual card to make an unauthorized purchase online, by phone, or by mail order.
- Theft of one’s identity. Identity theft occurs when someone uses your personal information to commit fraud or other crimes, such as your Social Security number or credit card number. Nearly 1.4 million reports of identity theft were received by the Federal Trade Commission in 2021.
- Skimming. Skimming occurs when criminals illegally place devices on ATMs, POS terminals, or gas pumps in order to steal data such as card numbers and PINs. Crooks can use this information to create bogus credit or debit cards. Annual financial losses from skimming are estimated to be more than $1 billion.
- Phishing. Through emails or text messages, fraudsters can steal your information, such as passwords or account numbers, using phishing. Criminals will then be able to access your credit card, bank, and email accounts. They may also sell your information to other criminals.
- Takeover of an account. Account takeover occurs when a cybercriminal uses a stolen username or password to gain access to another person’s online account. In general, thieves purchase usernames and passwords on the so-called “dark web.”
- Credit cards that have been misplaced or stolen. If you lose or steal your credit card, someone else may use it to make unauthorized purchases. You should notify the card issuer as soon as possible if your card is lost or stolen.
In the United States, credit card fraud is prevalent
According to the FTC, credit card fraud was the second most common type of identity theft in the United States in 2021, trailing only fraud involving government benefits or documents.
Card issuers, merchants, payment processors, and ATM transaction processors frequently bear financial losses as a result of credit card fraud. According to the Nilson Report, card issuers will bear 65.4 percent of the losses in 2020, with merchants, ATM acquirers, and merchant acquirers accounting for the remaining 34.6 percent. ATM and merchant transactions are processed by acquirers.
According to the Nilson Report, neither consumers nor businesses appear to be immune to credit card fraud, as fraud-fighting measures have been challenged by “ever more sophisticated” ways that crooks commit fraud. According to the Nilson Report, global losses from card fraud are expected to total $397.4 billion over the next ten years, with $165.1 billion of those losses occurring in the United States.
|Year||Amount (In billions)|
Reports of debit card fraud, credit card fraud, and associated financial losses continue to rise year after year, with the pandemic year of 2020 being an outlier. According to the Nilson Report, which tracks the payments industry, global payment card fraud losses will reach $47.22 billion in 2031, including $19.24 trillion in the United States.
|Year||Credit card fraud reports|
|Source: Consumer Sentinel Network Data Book 2021|
Reports of fraud by payment method
Although credit cards accounted for the most fraud reports by payment method in the United States in 2021, they ranked sixth in terms of total dollar loss, according to the FTC. In 2021, bank transfers and payments accounted for the most monetary losses ($756 million), followed by cryptocurrency ($750 million).
According to the FTC, credit card losses totaled $181 million, which was higher than debit card losses ($140 million) but lower than gift card and reload card losses ($233 million).
Age of credit card fraud
In 2021, Americans aged 30 to 39 reported the most credit card fraud incidents: 108,592. This accounts for one-third of all credit card fraud reports across all age groups.
|Age group||Credit card fraud reports|
|Source: Consumer Sentinel Network Data Book 2021|
|19 and under||1,707|
|80 and over||1,954|
State-by-state credit card fraud
The number of credit card fraud reports and financial losses tends to be higher in states with a larger population and lower in states with a smaller population, as one would expect. However, Rhode Island topped the FTC’s list for identity theft reports per capita in 2021, followed by Kansas, Illinois, Louisiana, and Georgia.
How to Guard Against Credit Card Fraud
It may appear impossible to protect yourself from credit card fraud, but it is possible. Here are 12 ways to keep fraudsters from causing financial damage.
- Make it a habit to check your credit reports on a regular basis. Keep an eye out for any unusual activity.
- Examine your bank and credit card statements on a regular basis. Examine them for unauthorized transactions.
- Don’t conduct financial transactions over public Wi-Fi.
- Consider putting a credit freeze in place, which limits access to your credit reports.
- Place a fraud alert on your credit reports if you’ve been the victim of credit card fraud.
- Documents containing personal information, such as a credit card number or Social Security number, should be shred.
- If you did not initiate the call, do not provide credit card information over the phone.
- Before transacting business or entering personal information on a website, look for URLs that begin with https:// at the top of your web browser.
- Make difficult-to-guess passwords for your online accounts.
- Use multi-factor authentication (MFA), which requires you to verify your identity in at least two ways (such as a
- PIN and a fingerprint) before you can log in to an online account.
- Install antivirus software and other technology to make your electronic devices more secure.
- Consider a digital wallet, which allows you to use your smartphone instead of a physical card for credit card transactions.