Credit card fraud: Common types, how to prevent it, and what to do if you're a victim

What is credit card fraud? 

Credit card fraud is a criminal act involving the unauthorized use of a credit card or its information to make purchases or withdraw funds. This crime may involve physical theft, hacking, account takeover, or other forms of deception.

While some cases involve a stolen wallet, many don't. A growing share of credit card fraud happens without any physical contact ("card-not-present" fraud). For example, a scammer may clone your card details online or trick you into sharing information via a phishing scam. In any case, the result is the same: Your financial security is compromised. You'll often be unaware until you spot unauthorized charges or see your credit score drop because of sudden, unexplained debt.

The term "credit card fraud" also covers a broader range of deceptive actions. These include falsifying identity to open new accounts (new account fraud), misusing corporate cards (business credit card fraud), or manipulating refund systems (merchant credit card fraud). 

Understanding the types and methods used in credit card fraud will help you identify fraudulent activity and stop it in its tracks.

Common types of credit card fraud

Credit card fraud takes many forms, but most incidents fall into two main categories:

• Existing account fraud. This crime is the most frequently reported type of credit card fraud. It happens when someone uses stolen credentials to access your credit card account and starts making changes. Such fraud may involve unauthorized purchases, cash advances, or linking your card to a digital wallet.
• New account fraud (application fraud). In this type, fraudsters use stolen personally identifiable information (PII) (like your name, address, date of birth, or Social Security number) to obtain credit in your name. They’ll often try to spend as much as possible on the new credit card accounts before they're detected. Victims often don't find out until their credit score drops or they get collection notices. This scam involves a credit check, so monitoring your credit report regularly is one of the most effective ways to catch it early.

How does credit card fraud happen? 

You may assume your accounts are protected as long as you keep your physical cards safe. But in reality, fraud doesn't always require a stolen card — just access to the numbers. Let’s take a look at the most common methods an unauthorized person can use to get your credit card information:

• Card skimming (cloned cards). Devices on ATMs or gas pumps copy your credit card data, which is then cloned onto a blank card. A credit card skimmer may also include hidden cameras or a false keypad to record your PIN.
• Phishing attacks. Phishing remains one of the most common methods used to steal personal data. You may receive a message that looks like it’s from your bank, a retailer, or a delivery service, urging you to click a link or provide sensitive information. That data is then used to open new accounts or take over existing ones.
• Data breaches. A large data breach can expose millions of credit card numbers, passwords, and personal details. This information often ends up for sale on the dark web, where it’s used to create fake identities, apply for credit, or access your existing credit card accounts.
• Card theft. Card theft is the most straightforward form of fraud: stealing the physical credit or debit card and using it quickly before it's reported stolen.
• Public Wi-Fi hacking. If you're entering payment details or logging into financial accounts on public Wi-Fi, someone nearby may intercept your data.
• Account takeover. If a criminal collects enough personal information, they can impersonate you with your credit card issuer. They may reset your passwords, change your contact info, or request a replacement card and use it for fraudulent purchases. Victims often discover the problem only after noticing unauthorized charges on their monthly statements.

Notable credit card fraud attacks

Over the past two decades, several large-scale credit card fraud incidents have exposed just how vulnerable digital payment systems can be. These attacks affected millions of individuals, cost businesses hundreds of millions of dollars, and reshaped how organizations approach data security:

• TJX Companies (2005–2007). Hackers infiltrated the systems of TJX Companies (owner of brands like T.J. Maxx and Marshalls), compromising data from over 45 million credit and debit cards. Albert Gonzalez, later identified as the ringleader, was eventually linked to a wider network responsible for multiple major breaches.
• Global financial firms (2013). In one of the most complex credit card fraud cases ever prosecuted, a group of hackers — four Russians and a Ukrainian — were indicted in the United States for stealing data from at least 160 million cards and causing over $300 million in losses. The attack affected companies across the US and Europe, including Citigroup, Nasdaq, Visa Jordan, Carrefour, JCPenney, and JetBlue.
• Target (2013). One of the most well-known retail breaches occurred at Target during the 2013 holiday season. Between late November and mid-December, hackers stole credit card data from approximately 40 million customers. RAM-scraping malware installed on point-of-sale systems captured names, account numbers, expiration dates, and CVV codes.
• Tokyo ATM heist (2016). In a highly coordinated strike, a group of around 100 individuals used stolen South African credit card data to withdraw $12.7 million from 1,400 ATMs across Tokyo — all within three hours. The attack took place on a Sunday and across international borders, giving the group enough time to disappear before the breach was discovered.
• IRLeaks attack on Iranian banks (2024). The Iranian hacker group IRLeaks attacked approximately 20 Iranian banks, including the central bank. The attackers accessed data on millions of customers, including credit card details, and demanded a ransom, which the Iranian government reportedly paid to prevent further financial instability.

How common is credit card fraud?

Credit card fraud is more widespread than you may think — and growing fast with digital transactions. Let’s take a look at a snapshot of the global credit card fraud statistics.

A 2025 survey found that 63% of US credit card holders had been victimized by fraud. Also, 8 in 10 cardholders admitted to at least one risky habit that made their accounts more vulnerable to fraudulent activity.

Unsafe credit card habits

While credit card fraud often involves technical tools and coordinated attacks, many breaches start with avoidable user behavior. Certain habits can quietly open the door for criminals looking to steal your financial information — often without you realizing it:

• Reusing passwords across multiple accounts. If one account is breached, others using the same credentials are immediately vulnerable.
• Saving credit card details in browsers or on shopping sites. It's convenient, but if your browser or account is hacked, so is your financial information.
• Using public Wi-Fi for financial activity. Unsecured networks are a common entry point for cybercriminals to intercept sensitive data.
• Relying on free VPNs. Many free VPN services offer minimal protection and may even collect or sell your browsing data, adding risk rather than reducing it.

Signs of credit card fraud

Fraudsters usually do their work quietly. However, you can detect credit card fraud if you know what to look for:

• Unrecognized transactions. Charges you don't remember making can be an early sign of misuse, even if they're for small amounts.
• Multiple small charges. Fraudsters often test a credit card with low amounts before making bigger purchases.
• Sudden changes in your credit score. If you notice your good credit score suddenly dropping to fair or poor, a fraudster might be using your credit card for unauthorized purchases or even opening new accounts in your name.
• Missing credit card statements. If you stop receiving your card bill, someone may have changed your address.
• Declined payments. Your credit card is maxed out, but you haven't spent much.
• Calls about purchases you didn't make. Your credit card company flags suspicious behavior.
• Fraud alerts. Alerts from your card issuer or credit monitoring service are often the first indicator that your account details may have been compromised.
• New accounts or credit checks. If you see a credit inquiry or a new account you didn't initiate, it could signal application fraud.
• Debt collection notices. If a collector contacts you about a balance you don't recognize, it may mean someone opened a card in your name and failed to pay the bill.

What to do if you're a victim of credit card fraud

When credit card fraud occurs, act fast — both to stop further charges and to speed up the recovery. If you see suspicious activity or believe your card has been stolen or compromised in a data breach, follow these steps immediately:

1. Contact your credit card company. Report a stolen card or any suspicious transactions using your bank's app, website, or customer service number. The card provider will block further transactions, start an investigation, and issue you a new card. The sooner you report it, the stronger your protections are, and the faster any fraudulent charges can be reversed.
2. Lock or freeze your card immediately. Most banking apps let you freeze your card to stop any more unauthorized transactions, or support requests for a credit lock. You can decide if you need a credit lock or freeze for your circumstances.
3. Check all recent transactions. Go back at least 60 days to find any unfamiliar purchases.
4. In the US, contact the three major credit bureaus. Contact Experian, TransUnion, and Equifax to prevent new accounts from being opened in your name. A freeze locks your credit file, while a fraud alert tells lenders to take extra steps before issuing credit.
5. Change your online banking passwords and enable multi-factor authentication wherever possible.
6. Monitor your credit reports. Enroll in a credit monitoring service or regularly check your reports for unfamiliar activity, such as new credit applications or accounts. This step helps detect fraud faster, so you can take action quickly and minimize their impact. You can also spot identity theft by looking at the personal section of your credit report.
7. Notify law enforcement. File a report with your local police department, and if you're in the US, submit a report to the Federal Trade Commission at identitytheft.gov. These reports help support your case if you need to dispute fraudulent accounts or charges later.

How to report credit card fraud

If you've been targeted by credit card fraud, reporting it will help protect your identity, support any disputes, and strengthen investigations. Follow these steps:

1. Gather evidence. Print credit card statements showing suspicious transactions. Keep records of any suspicious emails, texts, or calls related to the fraud.
2. File a police report. Contact your local police department either in person or online, if available. Be ready to provide a clear timeline of events and the evidence you've gathered.
3. Get a copy of the report. Your credit card issuer or the credit bureaus may ask for this during their investigation. It also serves as proof that you've taken formal steps to report the incident.
4. File a report with the Federal Trade Commission (US only). Go to identitytheft.gov to file a report with the Federal Trade Commission. The site will also guide you through recovery steps and provide a personalized plan to secure your identity.

How is credit card fraud investigated?

When you report fraudulent activity, your card issuer begins an internal investigation to verify the claim and prevent further damage. While the exact process varies by bank, most investigations follow a structured approach to resolve the issue as efficiently as possible.

A credit card fraud investigation typically involves these steps:

1. Initial fraud claim. Once you alert your issuer, the affected card is immediately blocked to prevent additional transactions. The suspicious charges are flagged for review.
2. Chargeback process. The bank contacts the merchant involved to reverse unauthorized charges.
3. Fraud analysis. The bank's fraud team examines transaction details, looking at patterns, locations, timestamps, IP addresses, and device information to determine whether the charge was legitimate or part of a larger scheme.
4. Collaboration with law enforcement. If the case involves a large loss, organized fraud, or financial identity theft, the bank may refer it to local law enforcement or federal agencies such as the FTC or FBI for further investigation.

Most credit card fraud investigations are resolved within 30 to 90 days. During that time, you may receive provisional credit for the disputed amount while the bank investigates. In most cases, if the claim is confirmed, you won't be held responsible for the fraudulent charges.

If you'd like to learn more, take a look at our guide on whether banks refund scammed money.

Can credit card fraud be traced?

Credit card fraud can be traced in many cases. Card issuers and investigators use transaction details, merchant records, device data, and surveillance footage to follow the trail. These tools help identify where and how the fraudulent activity occurred.

However, not all cases are easy to resolve. If the fraud involves international actors, anonymized networks, or stolen data sold on the dark web, tracing the source becomes far more difficult.

If you've been falsely accused or caught in a dispute over a transaction, it's important to speak with a credit card fraud lawyer. Legal guidance will help resolve the issue and protect your record.

Legal implications and consequences of credit card fraud around the world

In most countries, credit card fraud is a felony if the amount exceeds a certain threshold. Punishment depends on the value of the fraud, intent, and prior offenses. Here's a quick summary of legal consequences in some countries:

United States:

• Credit card fraud is considered a felony or misdemeanor, depending on the amount.
• Credit card fraud jail time: 1 to 10+ years (more for large-scale or organized fraud).
• Fines: Up to $250,000, plus restitution to victims.
• Federal law limits the cardholder's maximum liability for credit card theft to $50. Most card issuers waive this amount if you submit an affidavit confirming fraudulent charges.

United Kingdom:

• Prosecuted under the Fraud Act 2006.
• Up to 10 years in prison, depending on the severity and intent.

Canada:

• Covered under Criminal Code Section 342 as a form of identity theft.
• Fraud over CA$5,000 is an indictable offense.
• Up to 14 years in prison. 
• Cardholder liability for fraudulent transactions is typically capped at CA$50 if the fraud is reported promptly. 

Australia:

• Governed by provisions in the Crimes Act.
• Up to 10 years imprisonment for credit card-related offenses, including theft and misuse.

How to prevent and protect against credit card fraud 

Financial institutions use advanced systems to detect and block potential fraud, but your own habits play an equally important role in keeping your credit card accounts secure. These practical steps will help you reduce risk and respond quickly if something seems off:

• Use strong, unique passwords. Don't reuse passwords across multiple accounts, especially for banking or shopping platforms. A compromised login elsewhere can expose your financial data.
• Protect your PIN. Credit card cash advances and some chip transactions require a PIN. Always cover the keypad when entering it to avoid hidden cameras or "shoulder surfers."
• Enable multi-factor authentication (MFA). Add a second layer of protection to your accounts and devices. This extra step (a one-time SMS code, an external passkey, or biometrics like face ID or fingerprints) will block unauthorized access even if someone has your password.
• Review credit card statements monthly. Don't just check the cards you use often. Identity thieves may test rarely used accounts with small fraudulent charges to see if they're active. Any unrecognized transaction, no matter how minor, deserves attention.
• Avoid public Wi-Fi for transactions. Never enter credit card details or log into banking apps on unsecured networks. Use your mobile data or a trusted, secured connection instead.
• Shred old financial documents. Fraudsters sometimes use old bank statements and expired credit reports. If something has your account or personal information, shred it.
• Secure your mailbox. An unlocked mailbox is a simple entry point for fraud. Locking it helps protect sensitive mail, including statements and replacement cards. If you notice that you lost your credit card, report the loss to your credit card issuer immediately.
• Shop only on reputable websites. Look for HTTPS in the browser and check the legitimacy of unfamiliar merchants before making online purchases to avoid online shopping scams.
• Use credit accounts saved in digital wallets. Apple Pay, Google Pay, and similar services encrypt your card information and require authentication for every transaction. They're safer than handing over a physical card and reduce the risk of data theft.
• Turn on transaction alerts. Set up real-time notifications for any purchases from your account. Transaction alerts allow you to catch and report unauthorized charges as soon as they happen.
• Choose credit cards with zero-liability protection. Most major issuers offer zero-liability protection, meaning you won't be held responsible for unauthorized charges if you report them promptly.

Top tip: Consider using protection services

Credit monitoring makes a significant difference in how quickly you detect and respond to credit card fraud. NordProtect is an identity theft protection service designed to help you monitor your credit accounts and stay ahead of threats, especially in situations where your data may already be circulating online.

NordProtect offers:

• Credit monitoring with real-time alerts
• Dark web monitoring
• Identity theft recovery support
• Cyber extortion protection
• Online fraud coverage

If your credit card data is ever exposed through a breach, phishing scam, or data leak, NordProtect adds a layer of defense and peace of mind, helping you act quickly and limit the damage.