How is Credit Card Fraud Different from Identity Theft?

How is Credit Card Fraud Different from Identity Theft?PolicybazaarAverage Rating / 5 ( reviews)
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Thousands of people become victims to credit card fraud and identity theft every year. While some people already know the difference between these two, few people may believe that they are same. In reality, they both are different crimes and they can significantly damage your credit score, making it even difficult for you to apply for new credit cards and loans in the future.

Well, there are distinctive differences in how credit card fraud and identity theft are perpetrated, how badly they affect victims & what the recovery process looks like.

Generally, credit card fraud happens when a thief takes the information of your credit card and utilizes it to make authorized transactions against your credit card. On the contrary, identity theft occur when a thief utilizes your personal information to assume for an identity for single or multiple purposes. Let’s dig a little deeper into each of these crimes in order to get a better understanding of what is at stake for credit cards users.

What is Credit Card Fraud?

Credit card fraud usually occurs when a thief takes the information of your credit card and utilizes it to make unauthorized transactions. It is a form of identity theft but usually, it only affects a single or more of the victim’s active credit card accounts.

How Credit Card Fraud Happens

Thieves can do credit card fraud by:

  • Utilizing a skimming device at a gas pump or ATM.
  • Gaining access to an online account where the credit card information is saved.
  • Stealing the credit card from someone’s wallet or purse.
  • Pulling data from files stolen a data breach.
  • Eavesdropping on a public Wi-Fi network or unsecured website.
  • Deploying phishing emails, text messages, or phone calls.

What is Identity Theft?

Identity theft is the criminal act of stealing personal or financial information with the intention of utilizing it to assume another person’s identity. Generally, the stolen identity is utilized to make fraudulent transactions or to open bank accounts or credit cards. In addition to this, a false identity can significantly affect medical care claims and criminal records also. While your personal or financial information can be stolen and utilized by identity thieves, there are some important things that you should always keep confidential and beware of sharing such as your name, birth date, address, passwords, credit card numbers, bank account details, etc.

How Identity Theft Happens

Identity theft happens when a thief manages to access personal information like name, address, birth date, social security numbers, medical insurance policy, bank account details to assume your identity. Moreover, identity thieves can steal your personal information in various ways which include:

  • By stealing your wallet or purse. With this, identity thieves can have access to your credit cards, ID proofs, bank cards, and much more.
  • Utilizing your personal information that you might have posted online.
  • Stealing your mail.
  • Pulling data from files stolen a data breach.
  • Gaining access to an online account where the personal or financial information is saved.
  • Eavesdropping on a public Wi-Fi network or unsecured website.
  • Deploying phishing emails, text messages, or phone calls.
  • Through a lost Smartphone as it can provide identity thieves with a wide range of personal information.

And if identity thieves become successful in accessing your right personal information, then they can get credit under your name, open bank accounts or get access to medical services.

Difference between Credit Card Fraud & Identity Theft

Credit card fraud is an identity theft’s consequence. In the credit card fraud, a thief takes the information of your credit card and utilizes it for unauthorized transactions. However, the majority of the banks and credit card issuers have set certain liability limits. That simply means that even if a thief has charged thousands of dirhams to your credit card, you would likely only have to pay up to that liability limit. More often than not, banks simply waive off any charges which are an outcome of fraud.

On the contrary, the identity thief includes a lot more things than some fraudulent charges. Identity thieves can take your personal or financial information & they can open a wide range of credit, new credit cards or might get a false ID in your name. Dissimilar to credit card fraud, there is no liability limit. That simply means that you might end up paying for all the damages which are caused by an identity thief. Thus, identity fraud can have a long-lasting impact on your credit history.

Final Words

So, always try to keep your personal information safe and keep on checking your credit score regularly. Doing this will help you from becoming a victim of credit card fraud and identity fraud.

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