Updated: Feb. 23, 2023
If you're a victim of credit card hacking or fraud, you should know what goes on after the thieves have got your numbers.
Recent large-scale hacks at Target and Neiman Marcus are a reminder that our credit cards are increasingly vulnerable. In these cases, hackers found a way to install malware on point-of-sale devices and then sat back as the credit and debit card numbers streamed in.
But who are those hackers, and what happens to the numbers? Here’s a breakdown of what comes next, in four easy steps.
They Build a Criminal Network
Andrey Popov/ShutterstockThe basic idea is that people use stolen credit cards to buy stuff. But if the same person stole the card numbers and bought the stuff, he would easily be caught. Instead, baddies create rings: There are the people who buy and sell card numbers in online markets, sometimes called carding forums or card malls. There are the people who actually make fake cards. There are recruiters who find people to make purchases with the fake cards. And then there are the folks who actually go to stores with the counterfeit cards and try to make purchases. That’s a lot of people! Before you pull out your credit card, make sure you know about these places where you should never use your credit card.
They Create a Workflow
The logistics must be worked out carefully. To print the cards, the counterfeiters need equipment, which costs about $100. The people who buy and sell card numbers must figure out how the numbers are constructed: High-quality numbers that don’t yet look suspicious to financial institutions fetch a better price ($135 each, compared with $20 for a block of lousy numbers). The recruiters have to have contacts in the right places (a lot of cyber fraud originates in Eastern Europe, for example). Finally, the buyers need to feel confident looking a cashier in the eye. They must be trained in what can go wrong and how to react.
They Buy Stuff
leungchopan/ShutterstockOnce everyone is in place, it’s time to shop. Criminals often use their stolen credit card numbers to buy items that can easily be flipped on websites like eBay. Luxury items, popular smartphones, and other goods with high resale value are appealing. The bosses running these operations want to get as much money out of the items as possible so they can pay for the equipment and “employees” involved in the operation and then pocket the rest. By the way, make sure you read up onthe secrets an identity thief doesn’t want you to know.
They Keep a Low Profile
The FBI and other law-enforcement groups in the United States and abroad often work undercover, posing as potential card-number buyers in forums or as people offering to use numbers to buy goods.
Sometimes low-level buyers get caught if they use a fake card in a store. For example, fake cards often carry the stolen number on their magnetic strip but have a dummy number on the card itself. To try to detect these fakes, a cashier may enter the last four digits of the number on the card and flag the purchase if they don’t match the last four digits being charged. Typically, cops don’t identify the kingpin—just these criminals farther down the totem pole. You might not be aware of it, but your credit card company knows a lot about you, and it could get you in trouble. Read up on these thingsyour credit company knows about you.
It doesn’t seem like credit card hacks are going to stop anytime soon, so if you get that fateful call from your bank, you’ll know that your card is going down this rabbit hole—and you’ll need a whole new number. Now, learn about thesecommon online scans you might encounter—and how to avoid them.
FAQs
The Bottom Line
You may not lose any money if your credit card is lost or stolen, but you will have to contact your card issuer to cancel your card, get a replacement and report fraudulent charges on your account. Taking proactive steps to prevent a lost or stolen card can help reduce your risk.
What are 3 problems that can result from the misuse of credit cards? ›
Perhaps you've heard horror stories of credit card debt and ruined credit scores.
- Getting into credit card debt.
- Missing your credit card payments.
- Carrying a balance and incurring heavy interest charges.
- Applying for too many new credit cards at once.
- Using too much of your credit limit.
Buy electronics or gift cards. These items are among the most popular to purchase with stolen cards because they are easy to resell for a quick buck. Create fake cards. Then he or she may use the card himself to buy items or sell to another criminal.
What are the steps to take if your credit card is lost or stolen? ›
Contact your card issuer to speak to a representative.
Find your issuer's phone number from your credit card statements or, if they have a web-chat feature on their website, connect with a representative over chat. This step is necessary to close your card account and secure a replacement credit card.
What two things should a person do if his/her checks are stolen? ›
Quickly report the loss to your bank and also file a report with the police. If you don't, you could be held responsible for any unauthorized activity. If you know the numbers of the missing checks, you may choose to put a stop payment on each one.
Will the person who stole my credit card get caught? ›
Some estimates say less than 1% of credit card fraud is actually caught, while others say it could be higher but is impossible to know. The truth is that most credit card fraud does go undetected, which is a major reason why it's become a favorite among crime rings and fraudsters.
What are the 5 C's of credit? ›
The five C's, or characteristics, of credit — character, capacity, capital, conditions and collateral — are a framework used by many lenders to evaluate potential small-business borrowers.
What are 3 or 4 ways to avoid credit card trouble? ›
How to avoid credit card debt
- Pay as much as you can toward your debt. When it comes to avoiding credit card debt, your top priority is generally to pay off as much of your balance as possible each month. ...
- Track your spending. ...
- Save for emergencies. ...
- Keep an eye on your credit scores.
The Fair Credit Billing Act (FCBA) protects you against credit card fraud and limits your maximum liability to $50. Some card issuers expand that law by offering $0 fraud liability on unauthorized charges, which means you won't be held liable for any amount of fraudulent purchases.
What do thieves do with stolen cards? ›
Buying gift cards.
A cyber thief can use stolen credit card information to purchase gift cards from online retailers and easily sell them on sites like eBay. Buying these cards is relatively uncomplicated, as is reselling them, often referred to as a secondary-market scam, which is why many cyber criminals favour them.
Banks, therefore, employ comprehensive investigation procedures to combat fraud, protect their customers, and preserve their own credibility.
Who pays for stolen credit card? ›
You may not be responsible for fraudulent charges if you report your card as lost or stolen and follow the instructions in your bank agreement. The bank usually pays for stolen credit card purchases. Sometimes, the merchant is responsible.
What to do after credit card theft? ›
5 steps to take if you're a victim of credit card fraud
- Call your credit card company immediately.
- Check your credit card accounts and change your passwords.
- Notify the credit bureaus and call the police if necessary.
- Monitor your statements and credit reports.
- Check your online shopping accounts.
Federal Law. Certain federal credit or debit card fraud laws focus on interstate and foreign commerce. These federal crimes make it illegal to use a stolen or fraudulently obtained credit or debit card. These are felony charges, and the penalties may include up to 10 years in prison and fines of up to $10,000.
What if someone knows my ATM PIN? ›
Contact your financial institution and change your PIN immediately if you suspect someone knows it. If you share your PIN with someone, you may be responsible for transactions you haven't made or approved.
How much are you responsible for if your credit card is stolen? ›
In the event that your credit card is stolen in the United States, federal law limits the liability of cardholders to $50, regardless of the amount charged on the card by the unauthorized user.
Can you get your money back if someone steals your credit card info? ›
Most card issuers offer zero fraud liability. In many cases, if you report suspected fraud right away, you will not be liable for any unwanted charge, no matter the amount. A card issuer will typically issue a temporary refund while the company investigates a disputed charge, which sometimes takes 30 to 90 days.
Can a credit card be tracked if stolen? ›
In conclusion. Smart chips on credit and debit cards cannot be physically tracked. Their security features help protect your account information, but they do not help you locate a card if it gets lost or stolen.
Do police investigate debit card theft? ›
The police can then investigate the matter and potentially file felony charges against the culprit. If the thief is found and convicted, the judge can order that the thief pay victim restitution; or. Filing a civil lawsuit. The victim can sue the thief for theft and fraud.
Andrey Popov/ShutterstockThe basic idea is that people use stolen credit cards to buy stuff. But if the same person stole the card numbers and bought the stuff, he would easily be caught. Instead, baddies create rings: There are the people who buy and sell card numbers in online markets, sometimes called carding forums or card malls. There are the people who actually make fake cards. There are recruiters who find people to make purchases with the fake cards. And then there are the folks who actually go to stores with the counterfeit cards and try to make purchases. That’s a lot of people! Before you pull out your credit card, make sure you know about these places where you should never use your credit card.
leungchopan/ShutterstockOnce everyone is in place, it’s time to shop. Criminals often use their stolen credit card numbers to buy items that can easily be flipped on websites like eBay. Luxury items, popular smartphones, and other goods with high resale value are appealing. The bosses running these operations want to get as much money out of the items as possible so they can pay for the equipment and “employees” involved in the operation and then pocket the rest. By the way, make sure you read up onthe secrets an identity thief doesn’t want you to know.