Credit card fraud has many faces. A thief can go on a spending spree with your stolen card; an identity thief may use your data to rent apartments or take out cell-phone accounts; or a company may take your credit card payment over the Internet and not send the merchandise. Credit card companies lose more money from default than fraud, but they still have a stake in investigating fraud cases.
Visa states online that if it's notified of a possible credit card fraud, it will check with the entity involved — which could be a merchant, a website or an individual — to find out if other accounts might have been compromised. It then begins monitoring the possibly stolen numbers for suspicious activity while working with law enforcement and banks to track down those responsible and minimize losses. MasterCard states that it works with the FBI, Interpol and the Secret Service, among other agencies, to investigate fraud reports.
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Sometimes the first clue that your numbers have been stolen is when you pull your credit report — available free through the Annual Credit Report website — and discover charges you have nothing to do with. In addition to contacting the alleged creditor, you should contact one of the major credit bureaus — Experian, Equifax and TransUnion — and alert them to the problem. Equifax states online that it will alert the other bureaus and work with your credit card or other company to verify the disputed information and remove it from your report if it's fraudulent.
Businesses that handle credit cards have their own problems with credit card fraud. If a customer pays with a credit card over the Internet and it turns out the card was stolen, the merchant, not the credit-card company, swallows the loss. Even if the merchant receives approval, the rightful owner could dispute the charge later. WISCO Computing recommends businesses not only contact the bank that issued the suspect card, but also the card registration service, to minimize negative effects and speed up the investigation.
Credit card companies and the businesses that handle them attempt to minimize the risk of fraud before it happens. A suspicious merchant, for example, can call MasterCard and request a "code 10" authorization, which alerts the company that the card use in question may be fraudulent. Visa sets up security policies and imposes fines on merchants who don't follow them, or who fail to alert the credit-card company when there's a problem.