Credit Card Fraud

Credit Card Fraud: “Felony or Misdemeanor?” Important Tips to Keep Your Information Safe.

Credit card fraud, also known as financial device fraud, is a growing concern in today’s digital age and is considered a serious crime that can have severe consequences for both the victim and the perpetrator. The severity of credit card fraud cases can range from misdemeanours to felonies.

In the United States, credit card fraud is considered a federal offence and can be classified as a felony, depending on the case’s specific circumstances. With so much of our personal and financial information online, it’s important to take steps to prevent fraud. This can include protecting your account number, regularly monitoring your credit card statements, and being cautious of unsolicited emails or phone calls requesting personal information.

What are the Different types of Credit Card Fraud? 

Account takeover fraudnew account fraudcloned cards, and cards-not-present schemes are a few of the widely recognized credit card crimes. 

One of the most common forms of credit card fraud is identity theft when someone uses someone else’s personal information to make unauthorized purchases or withdraw money from their bank account. This can happen when a criminal obtains a person’s credit card information through a data breach, phishing scam, or physically stealing their wallet or purse.

In 2020, identity theft was the top category of consumer complaints reported to the FTC, accounting for 24% of all complaints. 2.3 million identity theft cases were registered with the Federal Trade Commission (FTC) in 2020 alone. FTC reported that the most common state for identity theft complaints was California, followed by Florida and Texas.

Another form of credit card fraud is card skimming, which occurs when a criminal attaches a device to a credit card terminal that can capture the credit card information of anyone who uses the terminal. This information is then used to make unauthorized purchases or withdraw money from the victim’s bank account. According to the Federal Trade Commission (FTC), reported losses from credit card skimming were about $32.2 million in 2019. FTC also reported that Gas station pumps are the most common location for card skimming, followed by ATMs and other self-service terminals.

Credit card fraud can also occur when an individual uses a fake credit card to make purchases or withdraw money from an ATM. This type of fraud is known as “card counterfeiting” and is considered a serious crime. Card counterfeiting is more prevalent in retail and food service industries. In 2018, US card counterfeiting losses amounted to a whopping $307 million, a decrease of 2.6% from the previous year. However, with the introduction of chip-enabled cards in 2015, the registered cases have dropped by 60% in the US.

What are the consequences of Committing Credit Card Fraud?

Credit card fraud is a serious offence in the United States, and the punishments for those convicted can range from fines and probation to prison. The severity of punishment for credit card fraud depends on the amount of money stolen, the crime’s sophistication, the perpetrator’s criminal history, and other factors.

Credit card fraud can be prosecuted at both the state and federal levels. At the state level, credit card fraud is typically treated as a misdemeanour, with a maximum penalty of one year in prison, a $1,000 fine, or both. If the severity of the crime indicates a felony conviction, the felony is treated differently in some states based on the state’s identity theft laws. But suppose the perpetrator has used four or more credit cards to commit financial fraud. In that case, the crime is usually prosecuted as a class five felony, with a penalty of one to three years in prison and restitution to the victim of credit card fraud.

Credit card fraud is prosecuted at the federal level under USC 1029, with penalties ranging from 10 to 15 years in federal prison, a fine of twice the value of the stolen property, and restitution to the victim.

Repeat offenders or those who commit more severe forms of credit card fraud, such as stolen credit card, or identity theft, can face even harsher penalties.

In addition to the legal penalties, those convicted of credit card fraud also face many other consequences. They may have difficulty finding employment, as many companies conduct background checks and may be hesitant to hire someone with a criminal record. They may also have trouble obtaining credit or loans, as a criminal conviction can negatively impact their credit score.

The Fair Credit Billing Act (FCBA): How does it work?

Since we are discussing the consequences, let’s discuss a vital consumer act – The Fair Credit Billing Act (FCBA). This federal law protects consumers against unauthorized use of their credit cards. The FCBA applies to credit card transactions and not debit card transactions.

According to this act, if you report any unauthorized charge within 60 days of the statement on which the charge appeared, the credit card issuer can only hold you liable for up to $50 of the unauthorized charge. You may be responsible for the entire amount if you fail to report the unauthorized charge within 60 days.

Once you report the unauthorized charge, the credit card issuer must investigate the matter and notify you of the results within 30 days. If the credit card issuer determines that the charge was unauthorized, they must credit your account for the amount of the charge while the investigation is pending.

If the credit card issuer determines that the charge was authorized, you have the right to dispute the decision and request the issuer to provide more information about the charge.

Finally, if the credit card issuer does not resolve the dispute in your favour, you have the right to take legal action against the issuer.

The Difference between a felony and a misdemeanour charge

Credit card fraud can be a misdemeanour or a felony based on the severity of the fraud and the state in which it happens.

A misdemeanour is a more severe crime than an infraction but less serious than a felony. While there is still the possibility for jail time, the fines and potential jail sentences are typically much less severe than those for felonies.

The crime of fraudulent use of credit cards is more severe and is considered a third-degree felony. It may include at least a one-year prison sentence. Depending on the state, credit card fraud can be charged as a misdemeanour or felony. Generally, if the value of the fraud is less than $500 in six months, it is usually charged as a misdemeanour. If the value is more than $500, or if it is the third offence, it is generally charged as a felony.

Additionally, possessing a stolen credit card is usually always charged as a felony.

How to Avoid Credit Card Fraud | How to Protect Yourself From Credit Card Fraud?

It’s important to note that credit card fraud can happen to anyone, regardless of income, education, or background. It’s essential always to be vigilant and take steps to protect yourself from credit card fraud.

Fortunately, there are precautions a credit card holder can take to protect him/herself from credit card fraud.

Always use secure Wi-Fi networks for online transactions and use your credit card wisely.

Use a single credit card for all autopay accounts, and don’t share your credit card number with unknown individuals or unauthorized online portals.

Freeze credit reports if one suspects identity theft, and monitor credit reports regularly to identify any unauthorized charges.

Never provide sensitive information such as personal or financial over the phone, emails, or text messages. Sometimes it may seem to be coming from a company or bank you are associated with. But you should be mindful that no banks or reputed companies will ever request your personal information via email, text, or phone.

Avoiding card readers at ATMs, gas stations, and other public places is a good idea as these can be tempered with skimming devices and passed on the bank details to unauthorized people who can misuse your card details for fraudulent activity.

Protect your mailbox where you receive bank or credit card statements and ensure you don’t keep those mail containing bank details for longer since it may give hackers a head start in Card-not-present scams.

Enabling fraud alerts on your mobile (text or email) can help you be aware of unauthorized transactions. These text or email alerts can be customized through online banking on your credit card issuer’s website.

How To Detect Credit Card Fraud?

A combination of technology, human oversight, and suspicious activity monitoring can help detect credit card fraud.

Some of the standard methods that financial institutions use to detect fraudulent activity include:

  • Analyzing transaction patterns and spending habits,
  • Monitoring for suspicious IP addresses and locations, and
  • Using machine learning algorithms to detect anomalies

Furthermore, many Credit card companies offer fraud detection services to their customers through instant messaging or email alerts for unusual activity.

In a nutshell, combining these resources can help increase the chances of detecting and preventing credit card fraud.

How To Report Credit Card Fraud?

Several resources and legal channels are available to report credit card fraud in the United States if you’re a Credit Card fraud victim.

  • Contact your credit card issuer immediately to report the fraud and request a new card. If you suspect unauthorized use of your credit card, you should immediately notify your credit card issuer. This should be done in writing and include your name, account number, and a description of the unauthorized charge.
  • Secondly, you can contact one of the three major credit bureaus, Experian, TransUnion, or Equifax, to report credit card fraud.
  • Additionally, you can file a complaint or report fraud, scams, or bad business practices on or call the helpline number:1-877-382-4357
  • It is also advisable to file a report with your local police department and the US Secret Service, which investigates financial crimes such as credit card fraud.

Using these resources and legal channels, you can take the necessary steps to protect yourself and your credit from further fraud.

As a credit card holder, you must take care of two simple things to curb the risk of falling prey to any perpetrator. 

Firstly, keep a tab on your bank and credit card statements regularly.

Secondly, be cautious when giving out personal information online or over the phone, and keep yourself aware through account alerts for any suspicious activity on your accounts.


In conclusion, credit card fraud is prevalent in today’s digital age. Individuals must be aware of the different types of fraud and the potential consequences for those who commit it. The severity of credit card fraud cases can range from misdemeanours to felonies, and it’s essential to understand the difference between the two.

Protecting your personal and financial information must be stressed more, and various ways exist. That includes being vigilant about suspicious activity on your credit card account, keeping your data safe, and reporting any suspicious activity to the authorities. Understanding the legal implications of credit card fraud is crucial to protect yourself and staying informed. With the proper knowledge and protection, you can help keep yourself safe from credit card fraud.

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