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Beware of Credit Card Micro Charges

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Micro charges are charges ranging from 20 cents to $10 and either are fraudulent, legitimate or fall into the category of “grey charges,” which describe sneaky recurring or unwanted charges.

These charges often go undetected because they are so small. Nine out of 10 credit card holders don’t scrutinize their statements carefully, allowing these scammers to get away with it.  In 2010, the Federal Trade Commission filed a lawsuit describing a criminal enterprise responsible for millions of dollars of micro charges.

In micro charges operations, scammers set up websites with toll-free numbers, which creates a “legitimate” web presence. With this facade, the websites are often granted merchant status, allowing them to process credit card orders.

The victims of this scam see the fictional merchant’s name and toll-free number on their credit card statements. If they attempt to dispute a charge, the toll-free numbers go to voicemail or get disconnected. Most frustrated consumers may not bother to take the additional step of disputing a 20-cent charge with the credit card company.

While 20 cents may not seem worth the bother, these seemingly minor charges only enrich the scammers. If you fail to recognize and dispute unauthorized transactions on your credit card statements, you take responsibility for the scammy charges.

Taking a moment to scrutinize your charges can save you money and headaches.

  • Pay attention to your statements. Micro charges are a red flag.
  • Monitor your purchases. Know what you’re getting into.
  • Check statements weekly or biweekly. Look for grey charges.

Sign up for BillGuard to watch your statements. It’s free, easy and effective. Robert Siciliano is a personal security expert & advisor to BillGuard and is the author of 99 Things You Wish You Knew Before Your Identity Was Stolen. See him knock’em dead in this identity theft prevention video. Disclosures.

The Ever Present Credit Card Scam

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The Ever Present Credit Card Scam

When people ask me, “How do I protect myself from credit card fraud?” I tell them, “Cancel the card, or never use it.” Because that’s the only way. Otherwise, all you can do is hope the merchant has a sophisticated system in place to mitigate the fraud.

The FBI’s Internet Crime Complaint Center’s Annual Report determined that the total dollar loss from all cases of fraud in 2009 that were referred to law enforcement by IC3 was $559.7 million; that loss was greater than 2008 when a total loss of $264.6 million was reported. Some estimate identity fraud in total at over $50 billion.

Flaws in the system used to issue credit facilitate new account fraud, since creditors often neglect to fully vet credit applicants with technology as essential as device reputation. Account takeover requires nothing more than access to credit card numbers, which can be accessed by hacking into databases or skimming cards at a point of sale terminal, ATM, or gas pump.

You should be aware of these common scams:

Micro Charges: Micro charges are fraudulent charges ranging from twenty cents to ten dollars. The idea is to keep the amounts low enough to go unnoticed by cardholders.

ATM Skimmers: Criminals can place a card reader device on the face of an ATM to copy your card data. The device, which appears to be part of the machine, may use wireless technology to transmit the data to the criminals. In many cases, thieves will also hide a small pinhole camera somewhere around the ATM (in a brochure holder, mirror, or speaker, for example) in order to record PIN numbers as well. Always cover the keypad with your other hand when entering your PIN.

Dummy ATMs: ATMs can be purchased through eBay or Craigslist and installed anywhere. (I bought one from a guy at a bar for $750.) A dummy machine has been programmed to read and copy card data.

Phone Fraud: The phone rings and it’s a scammer claiming to be calling from your bank’s fraud department. The scammer may already have your entire card number, which could be stolen from another source. You might be asked about a fictional charge you supposedly made, and when you deny it, you’ll have to provide your three to four digit CVV number in order to have the charge removed. Never give out this type of information over the phone.

Phantom Charges: When searching for something on the web, you come across a great deal. In the process of ordering, the website informs you that a discount is available along with a free trial of another product. Thinking you’re saving money, you take the bait. The next thing you know, your card is being charged every month and the company makes it very difficult to cancel the charges.

Look for and do business with companies that have a comprehensive, defense-in-depth approach to protect consumers against identity and financial fraud. Check your credit and banking statements carefully. Scrutinize every charge and call your bank or credit card company immediately to refute any unauthorized transactions.

(Be sure to do it within 30 or 60 days at most, depending on the type of card.)

Robert Siciliano, personal security and identity theft expert contributor to iovation, discusses ATM skimming on Extra TV. Disclosures.