The Difference Between Identity Theft and Credit Card Fraud

Now more than ever, people need to be careful to avoid falling victim to someone compromising their accounts. There are many ways someone with bad intentions can steal your sensitive data and/or information, which can put you in quite a pickle. Two examples of this are identity theft and credit card fraud, and while both are harmful to the one who has been taken advantage of there’s a critical difference between the two. Knowing what they are and how they are alike and different can help protect you from the broad range of sophisticated theft and fraud that exists in our technologically-advanced world today. 

What Is Identity Theft?

Identity theft has several definitions or categories, but overall, it refers to when someone steals your personal identifying information — like your social security number. They use that to hack into your current accounts or create other accounts using your identity. Essentially, they are pretending to be you. But, they no longer need to pretend, because according to those in charge of managing those accounts, this person is you. And once your identity is stolen it can be hard to prove who you are and thereby, get back your identity. 

Ways Your Identity Can Be Stolen

There are many ways that people can steal your identity, and this is why it’s important to keep your sensitive information as secure as possible. Stealing your social security number is just one of the ways, but there are other ways your identity can be stolen, too.

A data breach

When a company’s data is breached and you have your data stored at that company — for example, the Equifax breach of 2017 that released the sensitive data of millions of people — your information can land in the hands of someone with ill intentions. Even if you were doing your best to protect your own data, utilizing services that collect your sensitive data can always put you at risk. 

Malware

Malware is software that can be used by hackers to get into your computer and steal your information, sometimes by spying and other times, even by ransom. 

Phishing

This is an attempt — sometimes, a very sophisticated one — to trick you into sharing your data with a hacker by posing as a person or institution that you would normally not question sharing your data with, such as a bank. It can be done by email, text or phone. 

Unsecure browser

If you’re away from home and using a public Wi-Fi connection, your browser will usually notify you if it’s not secure. If you take the risk anyway, you can be exposing yourself to hackers who know how to get into your system via that same connection. 

Card skimming

This is when you use your debit or credit card at an ATM or a business and they skim your information card numbers in order to use that card. In the case of identity theft, they can use that information to get into your bank and find out more about you. 

Physical hacking

If you leave your passwords in a note on your phone, or write it in the back of a journal and you leave either one of those somewhere, it can fall into the wrong hands. It doesn’t always take the use of advanced technology to commit identity theft. 

What Is Credit Card Fraud?

Credit card fraud refers to fraud that’s committed using someone’s debit card or credit card, and it can be considered one form of identity theft. Generally, credit card fraud is used as a means to purchase goods or services with someone else’s money, but it can also be used as a gateway to more serious identity theft. 

Ways Credit Card Fraud Can Be Committed

There are different strategies that hackers use to commit credit card fraud. Has one of these ever happened to you?

Lost or stolen credit card

If you misplace your credit card, have lost it or someone has stolen it — especially the latter — you can assume that someone will use your card to commit credit card fraud.

Stolen phone

Many people have their credit and debit cards connected to their phone, and can pay for things using the Near Field Communication (NFC) feature. If someone gets their hands on your phone, they can use this, too. 

Someone compromises your account online

Similar to someone stealing your phone to access your credit cards, it’s also easy to commit credit card fraud online, even when the card is not available. Think about how many sites or subscriptions you have tied to your credit card. Or, have you ever sent your card number and/or a picture of your card to someone online? This can be the source of a breach. 

Credit card skimming

As mentioned under credit card fraud, this is a classic way that people can copy and take your card information, then use it to complete purchases before you even notice.

Counterfeit card fraud/credit card clone

Similar to credit card skimming, if someone has your credit or debit card information, they can use that to create a counterfeit card or clone card that acts like a legitimate card.  

Mail intercepted

If you’ve ever ordered a new credit card by mail, your mail can be intercepted and someone else can activate your card. 

The Differences Between Identity Theft and Credit Card Fraud

The main difference between identity theft and credit card fraud is that while all credit card fraud can potentially be one example of identity theft, not all identity theft is in the form of credit card fraud. Both are certainly not something you’d want to experience, but credit card fraud is generally more common than identity theft, and if you catch it in time it may also not be as severe as identity theft. 

When someone steals your credit card or you notice a purchase that you didn’t make, you can easily call your bank, close your account, and report the transactions as fraudulent. However, if someone steals your identity, it’s a lot harder to repair it — it’s a conundrum.

How to Prevent Becoming a Victim

The best way to prevent yourself from becoming a victim of credit card fraud or identity theft is to make sure you’re using the best security measures possible. Of course, another difference between identity theft and credit card fraud is how you protect yourself. With identity theft fraud, you’ll want to cast a wider net, so to speak. With credit card fraud, you’ll want to be focusing on protecting your credit card, debit cards, and their associating accounts. 

To help protect yourself in general, here’s what you can do:

• If you use your accounts online, be sure to use different, hard-to-guess passwords and two-step verification when possible. Also, use codes and PINs on your phone so that if you lose it, no one can access that information.
• Don’t share your account or personal identifying information with anyone you don’t trust. Also, be careful where you write this information down. 
• If you get an email or a phone call asking you to update your accounts, ignore it. Always call back or email on your own.
• Spread your money out in different accounts.
• If you use an ATM, make sure it’s a legitimate one. If you pay with your credit card at a store or restaurant, make sure you watch them process your card so that you can check if they’re skimming it. 
• Use software to protect yourself; there are many programs out there that can help keep your identity safe.
• Keep your social security card in a safe place at home. 
• Check your bank account often to see if there have been any fraudulent charges. 
• If something feels wrong, it probably is. Trust your gut.

Unfortunately, even if you try to protect yourself as much as possible, there’s always the risk that something can happen. 

What to do if someone steals your identity

If someone steals your identity, there are a few things you can do: 

• Close all your accounts, or let them know that your identity is stolen. This will help prevent the hacker from compromising all of your accounts. You can also see if freezing them is an option until you can figure out the root of the theft.
• Report it to the Federal Trade Commission (FTC). 
• The FTC also has an Identity Theft Recovery program to start making steps to recover your identity.

What to do if someone steals your credit card information

If someone gets their hands on your credit card or account information, you usually can prevent it from turning into a more challenging, total identity theft situation. 

• If you notice a charge that you don’t recognize on your account, call your bank immediately. Report the charge, and they’ll explain next steps. Typically, they’ll close your account and send you a new card. 
• If you still see the charge on your account even after reporting it, you may need to dispute the charge as fraudulent. Remember, the longer you take to notify your bank, the harder it could be to dispute something. 

Sources:

Experian – What is Identity Theft?
Identitytheft.gov – Report identity theft and get a recovery plan
FTC.gov – Equifax Data Breach Settlement
U.S. News & World Report – What Are Cloned Credit Cards?