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Distinguishing credit card fraud from identity theft

A man stealing data.

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The two are not the same thing

Credit card fraud and identity theft are two separate issues.

Credit card fraud and identity theft are expressions that are often used interchangeably. However, they are not the same.

So, what exactly do they mean, and how do they differ from one another?

Read on for insight into the distinctions between credit card fraud and identity theft. 

1. Concept

Identity theft is a general term that refers to any crime where a perpetrator wrongfully obtains and uses another person’s personal information for wrongful gain. Personal data includes your name, birth date, Social Security number, and bank details. The said gain could be economic, medical, or to evade the law.

On the other hand, credit card fraud is a form of identity theft that occurs when a perpetrator obtains a victim’s credit card information. The crime only affects the victim’s existing credit card accounts as the thief will make unauthorized purchases off them.  

2. How they happen

Identity theft involves personal information being obtained via any of the following ways:

  • Dumpster diving
  • Getting personal details during a company’s data breach
  • Picking personal information that you post online
  • Phishing emails, messages, or calls
  • Sloppy internet connection 

On the other hand, credit card fraud involves credit card details being obtained through any of the following ways:

  • Stealing the actual credit card
  • Using a credit card skimmer at an ATM or other point-of-sale terminals
  • Gaining access to the online accounts housing the credit card details
  • Unprotected internet connection 

3. Effect

Credit card frauds never have pleasant effects. The toll they take on victims both emotionally and physically can hardly be swept under the rug. However, from a financial standpoint, the effects are not so damaging. The Federal Trade Commission reveals that states limit the liability of consumers for unauthorized credit card use. 

In most instances, it’s limited to $50. Also, various credit card companies offer zero-liability fraud protection for timely reporting of fraudulent transactions.  

For other forms of identity theft, the effects can be quite devastating. This is because it’s not spotted easily so it can last decades. Some of the effects include:

  • In the case of medical identity theft, medical bills in your name being sent to collections after a long time  
  • Being harassed and arrested for crimes committed with your identity
  • A minor coming to maturity, only to find that their identity has been used for countless misdeeds in the case of child identity theft

You’ll have to do a lot of work to save your identity. Sadly, there’s no limit in liability. You have to pay the bills in collections, face the creditors and credit reporting agencies, and grapple with the law enforcement agencies.

4. Spotting the crime

Credit card frauds can be noticed quickly. As a matter of fact, there are various measures put in place by credit card issuers to detect fraud. Since the money being spent actually belongs to the credit card company, they are as concerned as you are, if not more. They are always on the lookout for red flags.

But in the case of other forms of identity theft, it might not be spotted quickly. In fact, you might not even know that the identity thief applied for a loan in your name until the debt collectors come for you or you apply for a line of credit and get denied. Also, it might only be when you end up in police custody that you figure out what’s going on.

Other forms of identity theft prove difficult to notice early.  

5. Bouncing back

Recovering from credit card fraud can be quite inconvenient. It normally involves some back and forth with your bank and credit card issuer. The compromised credit card is usually blocked and a new one is sent to you. However, the whole matter will be settled within a number of days.

But for some other forms of identity theft, it might take years to recover. You need to notify multiple government institutions and deal with creditors and credit reporting agencies. If your Social Security number was used fraudulently, you’ll have to inform the Social Security Administration; they’ll give you a new one.

But the old one will be with many of your professional contacts, and they might still use it to identify you. Thus, it might take a while to get them to start using the new one.
As we’re distinguishing credit card fraud from identity theft, it has become clear identity theft is broader and has possibly worse consequences. Nonetheless, the two must be avoided at all costs. If you find yourself having to deal with either credit card fraud or other forms of identity theft, contact us right away.  

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