There are few things more unnerving than realizing that someone has stolen your credit card or your financial information. If someone committed credit card fraud using your card number or info, what happens to them?
Is credit card fraud a felony? What punishment does a fraudster receive?
Credit card fraud is a serious crime, but whether or not an individual is charged with a felony or a misdemeanor will first depend on where the crime was committed and whether the crime is being prosecuted at the state or federal level. Though punishments can vary depending on the jurisdiction, punishments can include lengthy jail time and hefty fines.
If someone stole your credit card and racked up charges, it's natural to want to know what will happen to them. Let's take a look at what you need to know about the credit card fraud laws in the United States at both the federal and state levels.
What Is Credit Card Fraud?
When a person takes information from another individual's credit card or debit card with the intent to remove funds or charge purchases to the card, it is considered a form of identity theft.
There are a number of ways that an identity thief can obtain information from a credit card, including:
- Physically taking the card
- Acquiring the numbers using a card reader (aka skimmers) at gas stations, ATMs, or other locations
- Obtaining the numbers from an unprotected website
- Finding card and account details in the trash
- Stealing card information over public wi-fi networks
- Family members and friends committing "friendly" fraud
- Acquiring information through phishing attacks
- Getting the numbers through scam phone calls
- Obtaining credit card details by going through your mail
- Receiving credit card details after a data breach
- Hacking online store payment systems
- Installing spyware and malware on your devices
- Intercepting contactless payments (RFID collection)
Potential Elements of Credit Card Fraud
There are a few different ways that credit card fraud can be committed. Some common examples include:
- Obtaining, using, buying, selling, signing, or forging another person's credit card information fraudulently
- Selling goods or services to another individual while knowing that the credit card is being used without authorization or was obtained illegally
- Using one's own credit card to purchase items or services with the knowledge that the account lacks sufficient funds, is revoked, or has expired.
Understanding the Types of Credit Card Fraud
Fraudsters use a wide variety of scams to open new accounts in someone else's name or to get card info illicitly.
Here are some common fraud methods:
- Physical card theft: Just what it sounds like, this is when someone physically steals your card. They might steal your wallet or purse with your card, snatch your card from a restaurant table, or steal a new card right from your mailbox.
- Card-not-present theft: This type of credit card fraud doesn't require the thief to have possession of your card. They might get your information from other criminals online through hacking or through phishing scams. Using your name, security code, and account number, they can use your info to make purchases online.
- Cloned cards: Fraudsters will also take the information they receive from card skimmers and create duplicate cards they can then use.
- Account takeover: If a criminal is able to get enough personal information, they might be able to lock you out of your credit card account by contacting your card issuer.
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Is Credit Card Fraud a Felony?
There are laws at both the state and federal levels addressing the rising threat of credit card fraud and debit card fraud. Whether or not credit card fraud is considered a felony or a misdemeanor depends on a number of different factors. Still, it is primarily determined by the laws in the jurisdiction where the fraud is committed.
- In general, credit card fraud is considered a serious offense.
Some factors that can influence whether this type of fraud is considered a felony at the state level include:
- The amount of money involved in the fraud
- The criminal history of the individual committing the fraud
- The intent of the person that commits the fraud (as opposed to using someone else's credit card information accidentally)
- The number of victims involved in the fraud
- Whether the victim of the crime was elderly
Federal Credit Card Laws
The laws regarding credit card fraud at the federal level focus on commerce that occurs between states or internationally. Using a credit or debit card that is stolen or was obtained fraudulently is a federal crime.
Most credit card fraud cases are prosecuted at the state level. However, under 18 U.S.C. § 1029, they can also be charged as a federal crime. At the federal level, credit card fraud is often referred to as access device fraud.
It is a felony at the federal level to use, produce, or traffic in "unauthorized access devices" or "counterfeit access devices." Access devices are any tool that are used to gain access to another individuals personal information or financial accounts and include credit cards, gift cards, and debit cards.
Federal credit card fraud might sound like something only big-wig criminals are guilty of, but it's actually not as complex as you might think. If someone uses another individual's credit card to purchase something online or uses someone else's card that was issued in a different state, it becomes a federal crime.
It's also worth noting that someone who has committed credit card fraud at the federal level could also be charged with a number of other related federal crimes, including:
- Mail fraud
- Computer fraud
- Wire fraud
- Financial institution fraud
State Credit Card Laws
Credit card fraud laws in every state in the U.S. make it illegal to possess and use a credit card illegally. If you're interested in learning the laws in your state, you'll want to look at the specific statutes on the books.
- Common statutes regarding credit card fraud at the state level include those relating to the physical possession of a stolen credit card and the theft of account number information (aka identity theft.)
Let's look at a few U.S. states' credit card fraud laws.
Texas Credit Card Fraud Laws
As an example, let's look at the credit card fraud laws in Texas, the second most populous state in the country.
- In Texas, credit card fraud is a felony.
- All offenses are charged as state jail felonies except for those that are committed against an elderly person-- these are charged as third-degree felonies.
In the next section, we'll look at what the punishment is for committing this crime in Texas.
Ohio Credit Card Fraud Laws
Looking at the laws in Ohio regarding credit card fraud, we see that credit card fraud is a 1st-degree misdemeanor if the total value of the property, services, and debt is less than $1,000.
- If the value is between $1,000 and $7,500 the crime is a fifth-degree felony, and it is a fourth-degree felony resulting from a total value between $7,500 and $150,000.
- For crimes involving a total value of $150,000 or more, it is a third-degree felony.
Florida Credit Card Fraud Laws
First and second offenses for credit card fraud in Florida, so long as the amount is $100 or less, is considered a misdemeanor. Any fraud involving a value of more than $100 is considered a felony, as well as third offenses of any amount.
New York Credit Card Fraud Laws
Using a revoked or canceled credit card knowingly is considered a misdemeanor in New York. However, it's a felony to be in possession of a stolen card.
California Credit Card Fraud Laws
The state of California typically prosecutes credit card fraud as theft. Whether the charge against the fraudster is a misdemeanor or a felony has to do with how severe the crime was.
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What's the Punishment For Credit Card Fraud?
What type of punishment does a credit card fraudster receive? Though it can vary depending on a number of factors, the consequences of this type of crime can be as severe as serving substantial time in prison and large fines.
Punishments For Credit Card Fraud at the Federal Level
People that are convicted under the federal statute for access device fraud, which includes credit card fraud, can face up to 10-20 years in prison. Beyond that, they can also be required to forfeit items or money that they acquired illegally and pay a fine of up to $250,000. Restitution is also a possible outcome of credit card fraud at the federal level.
- Debit card fraud at the federal level can result in up to 10 years in prison, a fine of up to $10,000, or both.
Being found guilty of related crimes such as mail fraud, financial institution fraud, computer fraud, or wire fraud can result in up to thirty years in prison.
Punishments For Credit Card Fraud at the State Level
The punishments for credit card fraud at the state level are going to vary depending on the state where the crime was committed and is being prosecuted.
Earlier in the article, we discussed the Texas laws regarding credit card fraud and the fact that they are all charged as felonies.
Here are the potential punishments for committing credit card fraud in Texas:
- State jail felony: six months to two years in state jail and up to a $10,000 fine.
- Third-degree felony: (Charge when the offense is committed against an elderly person) two to ten years in state prison and up to a $10,000 fine
In California, penalties range from spending six months in jail and paying a $1,000 fine to being sentenced to three years in prison. The criminal can also be ordered to pay restitution.
The state of Florida offers severe punishments to credit card fraudsters as they are often classified as third-degree felonies unless the value is less than $100 and it is only a first or second offense. This can result in up to five years in prison and up to $5,000 in fines. For crimes that exceed $300 or involve more than one victim, criminals can be given up to fifteen years in prison and up to $10,000 in fines.
How Common Is Credit Card Fraud?
According to the Federal Trade Commission, credit card fraud has been the most common type of identity theft since 2017, except for a couple of months when there was a rise in unemployment benefits and relief program fraud during the height of the pandemic.
- It's worth noting that the data from the FTC only includes identity theft fraud and credit card fraud that was actually reported to the agency.
- Considering that most instances of credit card fraud are actually handled by the issuer directly and not reported to the FTC, it's safe to assume that the depth of the problem is greater than indicated by the FTC's data.
A survey released by the Federal Reserve helps to give more clarity to the scope of credit card fraud in the US, with the Survey of Consumer Payment Choice finding that 3.5% of credit card holders stated that they experienced theft, loss, or fraud related to a credit card in the previous year. The percentage of people that report this type of issue varies a bit from year to year, but the average is roughly 4.7%.
Another survey conducted by Security.org discovered that 58% of respondents had, at some point in their lives, experienced credit card fraud. For 9% of these respondents they had dealt with credit card fraud four or more times.
As you can see, credit card fraud is not, by any means, rare, and you certainly shouldn't assume that it just won't happen to you.
How to Protect Yourself From Credit Card Fraud
What can you do to keep yourself safe from credit card fraud?
Here are some tips:
- Don't shop on unsecured sites: Always make sure the URL of a website starts with "https" rather than "http," and look for the padlock right to the left of the address bar. Don't ever enter financial or credit card information into an unsecured site, and always make sure a business is legitimate before attempting to buy something from them online.
- Watch for skimmers: Skimmers are physical devices that can steal your credit card info. These are often put on gas pumps and ATMs and are able to grab your info from your card's magnetic strip. If you see any signs of tampering, find another ATM that's affiliated with your bank or go into the gas station to pay.
- Keep an eye out for phishing scams: Phishing scams have become pretty sophisticated these days. These can happen via phone, text, email, or through the mail. Always be wary when you receive communication from someone that's asking for financial or personal info.
- Don't save your credit card info online: Saving your credit card information online is definitely efficient, but it's not always secure. Even if a retailer or site is trustworthy, that doesn't mean they aren't vulnerable to data breaches.
- Protect your personal information: Identity thieves and credit card fraudsters can take various pieces of information about a person and string them together to commit fraud. Make sure you don't reveal too much personal information about yourself on social media-- even things like your birthday and your address can be used by bad actors to try and commit fraud.
- Don't perform financial transactions on public Wi-Fi: Public Wi-Fi networks are often unencrypted, so you don't ever want to disclose your bank account or credit card number over these networks. Hackers can lurk in public places to try and steal someone's information in this way. Always use secure networks when you're dealing with financial information online.
- Regularly review your credit report: It's a good idea to check it every four months to ensure nothing seems out of the ordinary. Not only can errors on your credit report impact your score, but they could also be indicative of fraud.
What to Do If You're a Victim of Credit Card Fraud
If you think someone has been fraudulently using your credit card information, what should you do?
Here are some steps you can take:
- Contact your credit card company: Some credit card issuers will have a place to report fraud on their website or app, while others might require you to call. If it's clear that fraud is occurring, they'll most likely cancel the card and give you a new one.
- Contact a credit bureau to place a fraud alert on your credit report: You can contact one of the three major credit bureaus and ask them to put a fraud alert on your credit report. You only have to request this from one credit reporting agency in order for it to be instituted on all of your credit reports.
- Report the fraud to the Federal Trade Commission at IdentityTheft.gov: You don't necessarily have to do this, but law enforcement agencies will use your report in their investigation if you file a police report. If other belongings were stolen in addition to your credit cards, it's possible that doing so could help you recover your other items.
- Report the fraud to local law enforcement: In addition to filing a report with the FTC, you can also contact your local police department.
Rebuilding Your Credit After Being a Victim of Fraud
Credit card theft isn't always considered a felony, but it is pretty much always treated as a serious crime. Whether it occurs at the federal level or the state level, knowingly using someone else's credit card information can result in lengthy prison or jail sentences as well as large fines.
If you are curious to know what the laws are in your state, you'll want to take a closer look at your state's penal codes. These will outline how fraud is defined, what constitutes each level of misdemeanor and felony, if applicable, and the potential punishments for individuals found guilty.
Dealing with credit card fraud can be truly overwhelming. Still, it's important to know that there are steps you can take when you discover fraud, ways to protect yourself in the future, and strategies you can use to clean up your credit so you can increase your access to financial opportunities down the road.
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