What Are the Causes of Credit Card Fraud?

Credit card fraud costs hundreds of millions of dollars every year, the Federal Trade Commission says. Banks pass these costs on to consumers, which means honest people are forced to pay higher interest rates and fees to make up for fraud-related losses. Credit card fraud can be blamed on many factors, ranging from inattentive merchants to certain types of technology that make it cheap and easy to do and help criminals hide their identities.


Skimming is a process by which criminals steal the information on your credit card's magnetic strip. That allows them to duplicate the card. This can be done at a standalone card reader like those on a gas pump or by a sales clerk who runs your card through a skimmer when you're not looking. The new card can be used until your credit card company recognizes an odd pattern and notifies you or until you catch unrecognized charges on your account. The easy availability of skimming devices makes this type of fraud commonplace, CBS News has reported.


Phishing means collecting personal information, including credit card numbers, to use them fraudulently, according to the Federal Trade Commission. The scam happens through email, phone or text messages that claim to be from your credit union or bank. The messages claim your account has been because of suspicious activity. You are instructed to call a certain number or visit a website that mimics your bank's site and enter your credit card information, the FTC says. The criminals capture and use the information to make purchases and steal your identity. This type of fraud is caused by the ease of setting up a fake website or getting an untraceable phone number through Internet phone services.

Lost and Stolen Cards

You open yourself up to credit card fraud if you lose your card or it is stolen. Thieves can use the card to buy items online. They may even make in-person purchases, especially if they stole your purse or wallet and have your driver's license and other identification. Many merchants do not even bother to check your signature or ID, which helps this type of fraud succeed.

Information Sharing

Some merchants, particularly those who sell items online or through infomercials, share your credit card information with their "business partners." These partners entice you into agreeing to sign up for memberships, products or services by offering a gift card or other item and offering a nominal shipping charge. By accepting the "gift," you are also agreeing to ongoing charges on your credit card from another company. Websites may also trick you into signing up for additional services or memberships by offering a discount in exchange for agreeing to a free trial. Those free trials often are very difficult to cancel, Creditcards.com warns.