There are few things more distressing than seeing a transaction you don’t recognize on your credit card statement. If it’s clear that someone used your credit card to buy gift cards, you’re probably wondering what steps you need to take next.
Beyond that, though, you might be curious why someone would buy gift cards rather than actual products or services once they got a hold of your credit card information.
If someone stole your credit card number and used it to buy gift cards, stick with us to learn what you need to do next.
When someone steals your credit card information and uses it to purchase gift cards without your authorization, it is typically referred to as "credit card fraud.”
Credit card fraud and gift card scams are related but distinct types of financial scams, each involving different methods and objectives. Though you might assume that it is considered a gift card scam to use your credit card to buy gift cards, this falls under the credit card fraud category.
Credit card fraud involves the unauthorized use of someone's credit card or credit card information to make purchases or withdraw funds without the cardholder's consent. The goal is typically to obtain goods or services directly using the compromised credit card.
Thieves may steal physical credit cards, clone cards, or obtain credit card details through data breaches, card skimming, or online hacking. They then use these cards or information to make unauthorized purchases– in some cases, the unauthorized purchase of gift cards.
Credit card fraudsters are usually motivated to commit this type of crime in order to acquire goods or services paid for with the victim’s credit card.
At the same time, you'll also hear about "gift card scams," which is a term that actually encompasses a different type of fraudulent activity than using stolen credit card info to buy gift cards.
Gift card scams involve tricking individuals into purchasing gift cards and providing the scammer with the gift card information or codes. The primary objective is to obtain monetary value in the form of gift cards, which can be used, sold, or converted into cash.
Gift card scams include things like:
Fraudsters have figured out a lot of different ways to steal money using gift cards. Here are some other common types of gift card scams:
Credit card thieves might choose to purchase gift cards using stolen credit card info for a number of reasons, but the general gist is that gift cards provide a relatively easy and convenient way for them to convert stolen credit card information into usable assets while reducing the risk of getting caught.
Here are some of the most prominent reasons credit card thieves might use your card info to buy gift cards:
Discovering that someone has used your credit card to purchase gift cards without your authorization can be distressing, but taking prompt action can help mitigate the situation and protect your financial interests.
Let's take a look at the steps you should take if you suspect unauthorized gift card purchases on your credit card.
Call the customer service number provided on the back of your credit card or on your credit card statement. Let them know about the unauthorized transactions and provide details of the charges, such as the merchant's name, transaction date, and transaction amount.
Another essential step when you realize someone has stolen your card info to buy gift cards (or anything else, for that matter,) is to ask the credit card issuer to place a temporary hold or freeze on your credit card to prevent further unauthorized transactions.
Contacting your card issuer and having them freeze your card can help take a huge weight off your shoulders. You don't have to worry that someone is out there racking up unauthorized charges on your card, giving you some breathing room to deal with the situation and get back on track.
Now that you have placed a hold or a freeze on your card, you'll want to follow the credit card issuer's instructions for disputing the unauthorized charges. They may require you to complete a dispute form or provide additional documentation. Be sure to clearly explain that the transactions were unauthorized and that you did not make the purchases.
If necessary, ask the credit card issuer to cancel your current card and issue a new one with a new card number. This will prevent the thief from making additional unauthorized charges. Furthermore, depending on how they accessed your card info, it helps ensure other people don't get their hands on your card number and details.
Even if you've only noticed one strange transaction on your account, the fact that someone has used your info to buy a gift card without your permission means it's possible other unauthorized transactions have been made.
Carefully review your credit card statements to identify any other suspicious or unauthorized transactions. Report any additional unauthorized charges to your credit card issuer promptly. If one person was able to access your card info, it's possible other transactions were made without your permission.
If you believe your credit card information was stolen, consider filing a police report. This documentation can be helpful in resolving the situation and, in some cases, may be required by your credit card issuer.
Will the police catch the person who used your credit card? The answer is: that it depends. Most experts say you shouldn't hold your breath expecting that law enforcement will be able to track down credit card thieves and fraudsters.
At the same time, the nature of the crime will impact how likely it is for the police to seriously pursue it and even catch the perp. For example, if your physical card was stolen and you have evidence that points toward a suspect, it's a lot more likely anything will come of filing a police report than if your info was stolen online.
It's best to document all communication with your credit card issuer, including dates, times, and the names of customer service representatives you speak with. This way, you can easily reference instructions you were given by customer service reps when discussing the issue with your credit card company over time.
Your hard work isn't done yet-- make sure you keep a close eye on your credit reports for any unusual activity. You can obtain free credit reports from the three major credit bureaus (Equifax, Experian, and TransUnion) annually at AnnualCreditReport.com. For the rest of this year, you can actually get free weekly credit reports.
The next thing you'll want to do is take steps to protect your personal and financial information. This may include updating passwords, enabling two-factor authentication, and being cautious about sharing sensitive information online or over the phone.
The good news is that federal laws protect consumers from liability for unauthorized credit card charges, so you should not be held responsible for fraudulent gift card purchases. However, it's essential to report unauthorized transactions promptly and work with your credit card issuer to resolve the issue as swiftly as possible.
Depending on how quickly you realized that your credit card info was being used by fraudsters to buy gift cards, you might have a little work to do when it comes to cleaning up your credit report. Dealing with the fallout from identity theft can feel totally overwhelming, but the truth is it’s worth taking the necessary steps so you don’t suffer the consequences of bad credit down the road.
In our digital world, there is always some risk that our financial and personal information will end up in the hands of someone with bad intentions. At the same time, you can take several steps to significantly reduce the risk of theft and unauthorized use of your credit cards.
When we make passwords for our online accounts, it’s tempting to prioritize making them easy to remember. However, the easier they are for us to remember off the top of our heads, it usually means it’s easier for fraudsters to figure out what our passwords are. You’ll want to create strong, complex passwords for your online accounts, especially for banking and credit card websites.
- In your effort to make strong passwords, use a combination of letters, numbers, and special characters.
It’s essential that you avoid using easily guessable information like your birthdate or common words in your passwords. You might consider using a reputable password manager to generate and store your passwords securely.
Many credit card companies will let you enable two-factor authentication, which is often abbreviated as “2FA”. Whenever possible, enable 2FA for your online accounts, including your credit card accounts. This adds an extra layer of security by requiring a second form of verification, such as a one-time code sent to your mobile device.
We’re all busy, and it’s easy to simply use our credit cards and let our payments be automatically withdrawn month after month without ever taking a closer look at our account.
The truth is, though, it’s a good habit to regularly monitor your credit card accounts.
- At least monthly, review your credit card statements and online banking activity. As you’re going through the statements, keep an eye out for any unauthorized or suspicious transactions.
You can also set up account alerts to receive notifications of unusual activity on your credit card. Though credit card fraudsters continue to get more sophisticated over time, so do the security measures used by credit card issuers. By signing up for this type of service, you can catch strange and unusual activity right away.
It’s easy to assume that the biggest threats to our credit card info and personal financial info all exist online. However, it’s just as important to protect your physical card.
Keep your physical credit cards in a secure location, such as a wallet or cardholder. Protect your card's PIN by not sharing it and covering the keypad when entering it at ATMs or point-of-sale terminals. It can be a good habit whenever you use your card to double-check that it’s back in its secure spot before leaving a retail store or restaurant.
One essential step to avoiding having your credit card info stolen to be used to buy gift cards is to only provide your credit card information on secure websites. Secure websites will have “https://” as a prefix rather than just “http://.” You should also notice an image of a padlock in the address bar when a website is secure.
- It’s honestly hard to be too cautious online. It’s always best to avoid clicking on suspicious links or downloading attachments from unknown sources in emails and messages, even if it seems completely harmless.
You’ll also want to be cautious when sharing your card information over the phone; always make sure you verify the identity of the caller and the purpose of the call. If someone calls you claiming they’re from a company or institution you trust and are asking you for personal or financial information, it is good practice to hang up and call them back. Use the phone number you have on the back of your credit card or on the institution’s secure website, not from an email you received or a number you are given over the phone.
Another step you can take to avoid credit card fraud is to keep your computer and mobile devices up to date with the latest security updates and patches. It’s also a good idea to use reputable antivirus and anti-malware software to protect against malware and keyloggers.
The ability to access the internet and take care of our important business anywhere is really convenient, but it’s honestly not a good idea to use Public Wi-Fi for online banking or credit card transactions. Avoid making online purchases or accessing sensitive accounts (including banking and credit card accounts) while using public Wi-Fi networks, as they may not be secure.
Fraudsters and identity thieves can sometimes get your information by going through your mail or trash. Make sure you shred or securely dispose of any documents containing your credit card information, such as credit card statements and credit card offers.
Many credit card issuers offer customizable transaction alerts. You can customize these alerts so that you are informed about certain transaction amounts or types– ensuring you’re notified right away of any unusual activity.
If you’ve realized that someone stole your credit card (whether it was the physical card or your information) to buy gift cards, it’s natural to feel distraught and violated. How could someone do something like this? What if it keeps happening?
The truth is, there are people out there who are willing to steal in order to benefit themselves. This is an unfortunate reality, but what we can do is take steps to protect our financial information both IRL and online.
Furthermore, by keeping a close eye on our financial accounts and credit reports, we can catch strange and unusual activity quickly. The sooner we realize that an unauthorized transaction has been made, the sooner we can remedy the situation and protect our accounts from further theft.
Are you working to improve your credit after your identity was stolen? Are you motivated to set up a financial system for yourself that offers you the best possible protection from credit card fraud? If so, make sure you check out the rest of our Credit Building Tips blog for more resources, articles, and guides.