What Is Credit Fraud?

27 October 2014

Credit fraud is when a credit card, bank account, loan, or other type of credit account is used to buy goods or services with the intention of avoiding payment.

There are a variety of ways credit fraud is committed but typically it starts when thieves gain access to your personal information such as a credit card or social insurance number. Cybercriminals use malware and advanced hacking techniques to gather this private information and then either sell it online to other individuals or use it to make fraudulent purchases themselves. Other, less high-tech criminals might dig through your trash for billing statements or steal your wallet in order to access your credit cards. However they end up getting ahold of your information, the results can be messy and difficult to clean up. Luckily, there are a number of precautions you can take in order to help protect yourself from credit fraud.

  • Keep Good Records: One of the best, most effective ways to prevent credit fraud is simply to stay vigilantly organized and keep your valuable information in one safe place. You can also write down all your credit card numbers and expiration dates and keep the list in a secure place, such as a locked safe or vault. This list will come in handy if your cards are ever physically stolen because when you call your bank to report card theft you can give them the correct account number.
  • Review Statements Regularly: A thorough review of your credit and bank statements each month for transactions you didn't make can be the key to detecting fraud early and protecting yourself from long term damage. Report any activity you didn't authorize to your bank immediately.
  • Be Cautious With Access: Even though it might make life easier sometimes, it's usually not a good idea to lend your credit cards or PIN numbers to family or friends. This isn't because you don't trust them, but because it's crucial that you know exactly where your personal information is at all times. Try not to leave receipts or credit card statements scattered around your home or office either, since you can't ever be completely sure who will have access to them.
  • Shred It: Be sure to shred any documents with your personal information including your mail, account statements, and receipts before throwing them away. Thieves can be extremely persistent in patching together pieces of trash to form complete, usable information.
  • Set Up Spending Alerts: Many banks and financial institutions have spending alerts that can be turned on to notify you when large purchases or made or your balance goes above or below a certain threshold. These alerts can be helpful to detect and react quickly to activity on your existing accounts.
  • Monitor Your Credit: You can request a free copy of your credit report from both credit bureaus, Equifax Canada and TransUnion Canada, but that won't give you the around the clock monitoring and alerts that a credit monitoring service can provide. If you are serious about giving yourself the best possible protection then you should also consider registering for credit monitoring services, which can alert you to activity in your credit report allowing you to take action to stop criminals from damaging your credit.

The best defense for credit fraud is to make sure you're aware of your credit standing and take extra precautions to secure your information from falling into the wrong hands.