What is Credit Fraud?
Identity theft and credit card (financial) fraud are two different types of crimes. Most of us no longer pay with cash as a default payment. Credit cards or plastic have become the top payment type that is used most often to make purchases. The best reasons to use a credit card are the conveniences, you can charge now pay later and you can get cash back on purchases.
Thieves love credit cards as much as you do. They can slip it from your purse or wallet and go on a quick shopping spree before you know that it is missing. Unlike a debit or ATM card, a thief just has to sign a name on the receipt, though the new cards with chips are attempting to become more secure, where you only have to enter your PIN. Good thing, for a thief can simply look at the back of your card and be able to forge your signature. In most stores, there is usually a policy to check ID but most cashiers do not. Very few even check the signature.
Credit card fraud is different from identity theft because the thief simply wants to load up on some quick purchases on your account before they ditch or sell the card to someone else. A smart thief knows that most credit cards are cancelled soon after they are stolen because the victim will call their bank after they realize that it is missing. If you are a victim, you will usually not have to pay for any fraudulent purchases, and federal law protects you in that you are only liable for up to $50. Most companies will not even charge you that, in the name of good customer service (and future interest payments!)
How Is Identity Theft Different?
Unlike credit card fraud, when a thief steals your identity, you can find yourself spending years trying to clean it up. A stolen social security number, a missing birth certificate and ID or sensitive documents that you accidentally threw away can all come back to create a nightmare for you.
To steal your identity a thief will issue new identification such as a photo ID, driver’s license or credit card in your name. These thieves can then get a job, buy a house or commit a crime, all in your name. Identity theft means just that, the complete theft of your identity which includes your name, age, mother’s maiden, signature and more. It is a truly nightmarish scenario, knowing that a criminal is walking around pretending to be you.
Identity theft is much harder to fight than credit card fraud because you have to convince the police, collection agencies, banks and everyone the criminal has ripped off that you are the victim and not the thief. This is not as simple as it seems. Most of us who have never had to deal with someone taking over our lives will not understand that you cannot simply say "I'm innocent."
If the police arrest you, you can hardly expect them to take your word for it when you plead innocent. At the end of the day, the real criminal will glide off into the night to commit more crimes while you spend years trying to clear your name. Once you have been cleared, the cycle can begin all over again. After you have convinced one group of people, another will come after you, because your stolen personal information is still circulating in the criminal world.
The only good news is the helpful identity theft protection tools available to you, as well as the now common knowledge of this type of theft. More and more law enforcement officials will now believe you, or at least work harder to make sure you are a victim before charging you for a crime somebody else committed in your name.
What is the difference between credit card fraud and identity theft? One is an inconvenience that your bank and credit card company will quickly solve and clear, and the other is a nightmare that can last for years.
* Source: Creditidentitysafe.com, a website devoted to ways to protect you from identity theft, as well as information on scams, news and credit monitoring comparisons.
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