Are Store Credit Cards More Susceptible to Fraud Than Bank-Issued Cards?

How Often Do Americans Fall Victim To Credit Card Fraud?

Credit card fraud continues to be a significant issue in the United States, with various forms of fraud causing substantial financial losses to consumers. According to a report by the Federal Trade Commission (FTC), consumers reported losing nearly $8.8 billion to fraud in 2022, marking an increase of over 30 percent compared to the previous year.

The FTC received fraud reports from 2.4 million consumers in 2022. The most commonly reported types of fraud were imposter scams, followed by online shopping scams. Investment scams alone accounted for losses of more than $3.8 billion, more than double the amount reported lost in 2021. Imposter scams followed, with reported losses of $2.6 billion, showing an increase from $2.4 billion in 2021.

Credit card fraud was a significant contributor to these statistics. According to Upgraded Points, credit card fraud was the most reported type of identity theft to the FTC in 2022, with 441,822 reports. The age group of 30- to 39-year-olds reported identity theft to the FTC the most in 2022. The states with the highest per capita reported fraud rates in 2022 were Georgia, Delaware, Nevada, Florida, and Maryland.

The rise in credit card fraud can be attributed to various factors, including the increase in online transactions and the impacts of the COVID-19 pandemic, which saw a shift towards more online shopping and banking activities. The pandemic also gave rise to government document or benefit-related fraud, likely due to pandemic-related claims.

Various forms of credit card fraud prevalent include Card-Not-Present fraud, credit card skimming, and the use of lost or stolen cards. Card-Not-Present fraud, in particular, is challenging to prevent as it involves transactions conducted online or over the phone where the card is not physically presented.

In conclusion, credit card fraud remains a pervasive problem in the United States, with substantial financial losses and a high number of reports made to the FTC. Continuous efforts, awareness, and the implementation of secure transaction methods are essential in combating credit card fraud and protecting consumers from financial losses.

Credit Card Fraud

Credit card fraud is a wide-ranging term for theft and fraud committed using a credit card as a fraudulent source of funds in a transaction. The purpose may be to obtain goods or services, or to make payment to another account which is controlled by a criminal. The stolen funds come from the credit card system, not the individual cardholders.

Card-Not-Present Fraud

This type of fraud occurs when a transaction is made where the card is not physically present. It is common in online or over-the-phone transactions. The merchant cannot personally examine the credit card for signs of possible fraud, such as a missing hologram or altered account number.

Merchants can use secure payment gateways and implement additional authentication processes like OTP or 3D secure.

Credit Card Skimming

Illegal card readers, known as skimmers, are attached to payment terminals to capture data from a credit or debit card’s magnetic stripe without the cardholder’s knowledge. Common places where skimming occurs include ATMs, gas stations, and restaurants.

Consumers should inspect card readers for any suspicious devices attached, and merchants should regularly check their payment terminals.

Lost or Stolen Cards

This involves the unauthorized use of lost or stolen credit cards. The fraudster can make physical or online transactions using the stolen card.

Cardholders should report lost or stolen cards immediately to the issuing bank to prevent unauthorized transactions.

Credit Card Application Fraud

Fraudsters use stolen personal information to apply for credit cards. The victim may not realize that a card has been opened in their name until they apply for credit or check their credit report.

Regularly monitoring credit reports and being cautious with personal information can help in preventing this type of fraud.

Identity Theft

This involves the fraudulent acquisition and use of a person’s private identifying information, such as their name, credit card information, or Social Security number, without their permission. Credit card fraud is a significant component of identity theft.

Protecting personal information, using secure connections, and regularly updating passwords are essential steps in preventing identity theft.

Data Breaches

Data breaches involve the unauthorized access and theft of sensitive information from a system. Credit card information can be stolen during such breaches and used for fraudulent transactions.

Companies should ensure robust cybersecurity measures, and individuals should be cautious about where they share their credit card information.

Store Credit Cards v.s Bank Credit Cards

When comparing the vulnerability of store credit cards to bank credit cards, several factors come into play, such as the security infrastructure, usage scope, and associated benefits. Store credit cards might be seen as easier targets due to potentially lesser security protocols, but their limited usability might also reduce exposure to diverse fraud risks.

Store Credit Cards

Store credit cards are typically limited to use in specific stores or a group of affiliated stores. This limited usage can sometimes reduce the exposure to potentially fraudulent activities across various platforms.

Store credit cards might not always be equipped with the same level of security features as major bank credit cards. This could make them more susceptible to fraudulent activities, as they might lack advanced fraud detection and prevention mechanisms.

Store cards often come with promotional offers, discounts, and incentives. Due to the promotional offers and discounts associated with store credit cards, they might be particularly attractive targets for fraudsters looking to exploit these benefits illicitly.

Bank Credit Cards

Bank credit cards can be used almost universally for various transactions, increasing their exposure to potential fraud risks in different environments, both online and offline.

Bank credit cards often incorporate advanced security protocols such as EMV chips, tokenization, and robust encryption to safeguard against unauthorized transactions and data breaches.

Major bank credit cards often come with zero liability policies, protecting the cardholders from unauthorized transactions. This doesn’t prevent fraud but limits the cardholder’s liability.

Legal and Network Protections

Both types of cards benefit from legal protections such as the Fair Credit Billing Act (FCBA), limiting consumer liability to $50 for unauthorized transactions.

The rules of the card network (Visa, Mastercard, etc.) also play a role in determining liability and protections in case of fraud. These rules can influence whether the merchant or the issuing bank bears the cost of fraudulent transactions.

While both store credit cards and bank credit cards are susceptible to fraud, the risk may not necessarily be higher for store cards. It largely depends on the specific security features and policies of the card, the merchant, and the issuing bank or financial institution. Additionally, the legal and network rules also play a crucial role in determining the liability and resolution of fraudulent activities (source).

The Penalty For Committing Credit Card Fraud In Texas

In Texas, credit card fraud is taken very seriously and is subject to substantial penalties under the law. The penalties for credit card fraud in Texas can range from misdemeanors to felonies, depending on the severity and nature of the offense

Credit Card Fraud As A State Jail Felony

If someone uses stolen credit card information to make unauthorized purchases, they can be charged with a state jail felony. The penalties for a state jail felony include up to two years in jail and a fine of up to $10,000.

Credit Card Fraud As A Third-Degree Felony

In certain circumstances, credit card fraud can be escalated to a third-degree felony, likely depending on the amount of money involved or the nature of the fraud. A third-degree felony can result in up to ten years in prison and a fine of up to $10,000.

False Statements To Obtain Property Or Credit

Making false statements to obtain credit, such as inflating income or hiding debts, is also considered a form of fraud. Penalties can range from a Class C misdemeanor, punishable by a fine of up to $500, to a felony with potential jail time and substantial fines.

Legal considerations

Legal considerations in credit card fraud cases are multifaceted and crucial in determining the outcome of a case. These considerations play a pivotal role in the prosecution and defense of alleged fraudulent activities

Intent to Defraud

One of the fundamental legal considerations in credit card fraud cases is establishing the intent to defraud. The prosecution must prove beyond a reasonable doubt that the accused had a deliberate intention to commit fraud. This means that the individual must have knowingly and willfully engaged in deceptive practices to cause financial harm or loss to another party.

Proving intent is crucial because it separates accidental or negligent actions from deliberate criminal behavior. If the defense can create reasonable doubt regarding the accused’s intent, it may be challenging for the prosecution to secure a conviction.

Jurisdiction

Jurisdiction refers to the legal authority of a court to hear and decide a case. In credit card fraud cases, jurisdiction can be state or federal, depending on the nature and extent of the alleged fraud. For instance, if the fraudulent activity crosses state lines or involves federal agencies or institutions, it may fall under federal jurisdiction.

The jurisdiction determines the applicable laws, legal procedures, and potential penalties. Federal cases often involve more stringent laws and harsher penalties compared to state cases.

Evidence and Investigation

The collection, preservation, and presentation of evidence are paramount in credit card fraud cases. Evidence may include transaction records, surveillance footage, online activities, and witness testimonies. A thorough investigation is necessary to gather substantial evidence to support the prosecution or defense.

The quality and integrity of evidence can significantly influence the case’s outcome. Inadequate or improperly handled evidence may weaken the legal position of the parties involved.

Legal Defenses

Various legal defenses can be employed in credit card fraud cases, such as lack of intent, mistaken identity, or authorization. The defense strategy should be meticulously crafted based on the evidence and legal considerations pertinent to the case.

A robust defense strategy can challenge the prosecution’s case, potentially leading to reduced charges or even acquittal. It is essential to have competent legal representation to navigate the complexities of legal defenses effectively.

Penalties and Sentencing

The penalties for credit card fraud can range from fines and probation to imprisonment, depending on the severity of the offense. Sentencing considerations include the amount of money involved, the nature of the fraudulent activity, and the accused’s criminal history.

Understanding the potential penalties is crucial for both the prosecution and defense to strategize their cases. It also helps the accused to make informed decisions regarding plea bargains or trial.

Restitution and Civil Liability

In addition to criminal penalties, individuals convicted of credit card fraud may be required to pay restitution to the victims. They may also face civil lawsuits for damages resulting from the fraudulent activities.

Restitution and civil liability add another layer of legal and financial consequences, emphasizing the severe repercussions of credit card fraud convictions.

In conclusion, legal considerations in credit card fraud cases are intricate and vital in shaping the case’s trajectory and outcome. A nuanced understanding of these aspects is essential for legal practitioners and the accused to navigate the legal process effectively and advocate for their positions robustly.

Need Help? Call Us Now!

Do not forget that when you or anyone you know is facing a criminal charge, you have us, the Law Office of Bryan Fagan, by your side to help you build the best defense case for you. We will work and be in your best interest for you and we will obtain the best possible outcome that can benefit you. We can explain everything you need to know about your trial and how to defend your case best. We can help you step by step through the criminal process. 

Therefore, do not hesitate to call us if you find yourself or someone you know that is facing criminal charges unsure about the court system. We will work with you to give you the best type of defense that can help you solve your case. It is vital to have someone explain the result of the charge to you and guide you in the best possible way.

Here at the Law Office of Bryan Fagan, we have professional and knowledgeable criminal law attorneys who are experienced in building a defense case for you that suits your needs for the best possible outcome that can benefit you.  

Also, here at the Law Office of Bryan Fagan, you are given a free consultation at your convenience. You may choose to have your appointment via Zoom, google meet, email, or an in-person appointment; and we will provide you with as much advice and information as possible so you can have the best possible result in your case. 

Call us now at (281) 810-9760.

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Credit Card Fraud FAQs

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Choose a question What are the main differences in fraud risks between store credit cards and bank credit cards? How does the limited use of store credit cards impact their fraud risk? What advanced security features do bank credit cards have? Are consumers protected against unauthorized transactions? What should cardholders do to protect themselves from credit card fraud?