Evidence shows cyber thieves prefer to target the wealthy. The affluent carry higher credit limits and rely on credit cards for much of their buying throughout the month, giving thieves access to higher dollar purchases without raising suspicion with the lender. Wealthy shoppers are more likely to travel, accumulate more credit charges each month, and buy higher ticket items regularly. These factors make it more difficult for credit card servicing companies to spot irregular spending patterns and easier for consumers to miss fraudulent charges during a statement review.
Recent studies show elite credit cards, such as the American Express Black Card and the Visa Infinite, experience twice the fraud rates of other credit cards. Affluent households also receive more fraud alerts from banks, reviewing suspicious activity on a credit card.
Who Are Affluent Credit Card Users?
If you make over $75,000, you are more likely to experience credit card fraud.
A recent survey by Creditcards.com measured the level of fraud alerts received by consumers based on income and level of education attained. The study found that those making over $75,000 with a college degree were the most likely to receive a fraud alert,requiringa purchase verification. Fraud alerts triggered by banks are up 15% over the last two years with 30% of Americans receiving at least one alert on a credit card purchase and 25% receiving a notice to verify a debit card purchase.
Banks have a vested interest to reduce fraud because, typically, they must absorb the loss when fraud occurs on consumer accounts. Today, most banks offer zero liability when fraud occurs on an account, resulting in more aggressive measures to curb credit card fraud.
The Creditcards.com survey also conveyed that 68% of those earning $75,000 or more received a fraud alert, warning them of unauthorized account activity. Only 40% of those earning between $30,000 and $49,999 received a similar alert and a mere26% of those earning under $30,000 received alerts. Comparable results occurred when including the level of education obtained by the customer. Those with a college degree receive fraud alerts at a rate of 65%, where those with only a high school diploma had only a 25% likelihood of receiving a fraud alert.
How Fraud Alerts Curb Cyber Theft
Increasingly, banks are leaning on consumers to help identify fraud at the point of purchase. Credit card companies and banking institutions have sophisticated software programs designed to identify purchase activity that might be suspicious. Automated systems thenflag a transaction triggering contact. The company can call, send a text or email, requiring the customer to verify the purchase. Failure to respond immediately can result in a declined transaction. Despite the increased use of technology and ease of automated text messages, most companies continue to rely on phone calls to verify suspicious purchases.Many lenders use multiple methods to reach the customer quickly. As of April 2017,consumers can opt-in to text messages for all Visa and Mastercard purchases.
Current systems produce a high number of false alarms, with nearly a third of alerts received by consumers confirmed as authorized purchases. The practice is intended to use proactive measures and stop a fraud at the purchase point to prevent losses.Based on the Creditcard.com survey, 37% of fraud alerts sent to consumers represented 100% authorized charges the customer intended to make. Another 15% were mostly legitimate charges, meaning there is a high level of false alarms triggered by sensitive software systems.
To stay in the loop, ensure the credit and debit card companies have your currentinformation and opt-in to text messages allowing you to respond immediately to questionable charges. Making it easy for companies to contact you will limit the inconvenience of system declines on purchases. Aggressive efforts to reduce fraud will potentially leave you with a blocked card even though you are the one making the purchases.
Despite frequent false alarms and aggressive use of fraud monitoring systems, credit and debit card fraud is still rising each year. Crooks find innovative ways to steal money with every counter measured lenders employ to protect your account.
How big is the Problem of Credit Card Fraud?
In addition to stealing credit card information and making purchases that might result in a fraud alert to the consumer, thieves use other ways to steal money and goods.
Common practices can include the following
- Thieves create fake cards with inactive chips and convince cashiers to swipe the magnetic strip, bypassing the latest EMV technology. The implementation of EMV chips has lowered fraud on in-store purchases but does not reduce online fraud. New targets include establishing new fraudulent accounts, which increased by 113% and accounted for 20% of all the fraud in 2015.
- Crooks now sell stolen credit card information along with security checks such as the zip code and CV codes associated with the card. Online theft is not subject to the protections of the new EMV chips and a fast-growing segment of the fraud market.
- A Nilson report put global fraud losses in 2016 at $24.7 billion dollars, a 12% increase over 2015, with 47% happening in the United States. Perhaps due to higher credit limits,Credit cards experience significantly more fraud than debit cards.. Most Americans have higher limits on credit than balances in their savings accounts.
Best Way to Protect Yourself from Fraud
Carefully examining bank and credit card statements will catch unauthorized purchases and stop fraud on existing accounts.
Frequently checking your credit report will catch new accounts established in your name. Placing an alert or freeze on your credit report can prevent a thief from gaining access to your credit file, which enables them to open an account. Fraud alerts are free and last for 90 days. Fees apply if you upgrade to a credit freeze.