Credit card fraud sounds scary, doesn’t it? While a serious problem, fortunately most Australians won’t experience it. A 2007 interview conducted by the Australian Bureau of Statistics (ABS) showed that fewer than 400,000 Australians had been victims of credit or bank card fraud during the previous year (less than 5% of citizens of at least 15 years of age). Still, 400,000 isn’t a small number of victims. The best way to avoid being one of them is to understand credit card fraud and take precautions to protect your bank and credit card information.

Definition of Credit Card Fraud

Credit card fraud is a type of personal fraud or identity theft. Basically, it involves someone other than you making unauthorised charges on one or more of your credit cards.

How Credit Card Fraud Works

Credit card fraud results from a thief gaining access to your credit card details. Sometimes having access to the physical card alone is enough, such as using it to make online purchases (as opposed to cash withdrawals). Thieves can get your credit card information in a number of ways, from finding a lost card to hacking a company’s computer system where your past purchase details are stored.

Once the thief has your credit card information, they can theoretically use it just as you would. If they have your physical card, some may try to forge your signature. If they only have a copy of your number, expiration date, and other on-card data they can’t use your card in-person, but they can still make charges on the Web or over the phone. Chances are that you won’t even realise the fraudulent charges were made until you receive your next credit card statement.

Preventing Credit Card Fraud

In essence, there’s potential for credit card fraud every time you use your card online, over the phone, or in-person. Still, there’s no need to panic. There are things you can do to protect yourself.

Most importantly, if you ever lose your credit card, you should immediately report it to the credit card company to stop potential thieves from making charges in your name. Credit card companies also generally offer some kind of fraud protection, where you can’t be held liable for fraudulent charges, or only to a limited dollar amount. Those conditions are governed by The EFT Code, and your rights therein (such as zero liability when the fraud is conducted via an online purchase, and you personally didn’t contribute to that fraud). Get to know your credit card company’s terms and The EFT Code well, as your liability may depend on your own actions (such as whether or not you reported a lost card in a timely manner).

There may be a risk to using credit cards, but there are risks associated with any type of payment. If nothing else, remember that credit cards are at least safer than cash–something you likely can’t replace if stolen. Use them wisely, and carefully, and you can avoid becoming a victim of credit card fraud.