How do credit card fraud and identity theft differ?

How do credit card fraud and identity theft differ?
How do credit card fraud and identity theft differ?

American Express offers various benefits and promotions. Visit their website at [americanexpress.com](http://americanexpress.com) for more information.

Have you ever received a call from your credit card issuer regarding a suspicious transaction? This usually indicates that a "fraud alert" has been triggered and your bank needs to verify the authenticity of the transaction. If you did not make the purchase, you may have been a victim of credit card fraud.

Recovering from credit card fraud is usually straightforward; your credit card issuer will typically refund the fraudulent charge and provide you with a new card number. While your card number may have been compromised, credit card fraud does not necessarily mean that your personal information has been stolen. If your personal information has been stolen, you will need to address a different set of issues.

Credit card fraud and identity theft both involve the misuse of your information, but they are distinct. CNBC Select provides a breakdown of the differences and offers suggestions for safeguarding your personal information.

Compare identity theft protection services

Credit card fraud vs. identity theft

Credit card fraud happens when unauthorized charges are made using your credit card information. Thieves can obtain your credit card numbers through data breaches, stealing your physical card, or skimming your card.

Credit card fraud is a form of identity theft where someone steals your personal information to open fraudulent accounts in your name. In contrast, identity theft involves more than just stealing your credit card number; it involves assuming your identity by using your personal information, such as your name, address, date of birth, and Social Security number.

Recovering from identity theft is a challenging process that requires continuous monitoring of credit reports, dealing with law enforcement, debt collectors, and replacing IDs. Unlike simply changing a credit card number, it can take years to fully recover from identity theft.

How do credit card fraud and identity theft differ?

Credit card fraud protections

Federal laws safeguard you from financial responsibility in the event of identity theft or credit card fraud.

You are safeguarded from credit card fraud under the Fair Credit Billing Act (FCBA), with a maximum liability of $50 if fraudulent charges are reported within 60 days.

Zero-liability protection is offered by credit card issuers beyond federal protections. Visa, Mastercard, American Express, and Discover all provide this protection. However, it's important to confirm that your specific card includes it and to know how to report any unauthorized transactions since different card issuers may have different policies.

Here are some cards that offer zero-liability protection as a benefit:

Business credit cards may have extended zero-liability protection, so it's important to check with your issuer to see if this applies to your specific card.

Identity theft protection services to consider

It's crucial to be vigilant about potential risks of identity theft before any harm is done. Although it's impossible to completely protect your identity, there are numerous identity theft protection services available to help you monitor your personal information and receive alerts to prevent falling victim to fraudulent websites and scams. Many of these services also offer identity theft insurance to help you recover any expenses related to restoring your identity.

If you're seeking an all-in-one identity theft protection service, CNBC Select recommends Aura. This service safeguards against financial fraud, identity theft, spam calls, online theft, phishing and scam websites, viruses and malware, and also provides customized security for kids and financial alerts such as credit score monitoring. Aura offers individual, couple, and family plans.

If you need both credit monitoring and identity theft protection, consider PrivacyGuard. Their combined plan includes a free VantageScore, credit monitoring from all three bureaus, alerts and reports, dark web scanning, public records monitoring, and bank account monitoring, as well as $1 million in identity theft insurance. Additionally, they offer separate plans for just identity or credit protection.

A free credit monitoring service can offer basic protection if you cannot afford a paid identity theft service. By monitoring your credit report and statements, you can promptly detect any suspicious activity, such as new accounts under your name or significant credit score fluctuations, which may suggest identity theft.

Experian's credit monitoring service is excellent because it offers real-time alerts about your credit report and a one-time dark web surveillance report upon signing up.

Compare credit repair options

Bottom line

Although credit card fraud and identity theft are related, identity theft can have severe consequences. The effects of identity theft can persist for an extended period, while resolving credit card fraud only requires obtaining a new card. Fortunately, there are measures you can take to minimize the risk of identity theft, such as utilizing a protection service.

Why trust CNBC Select?

Our goal at CNBC Select is to deliver top-notch service journalism and in-depth consumer advice to our readers, enabling them to make well-informed decisions when it comes to their finances. Each of our personal finance articles is the result of thorough reporting by our team of expert writers and editors, who possess extensive knowledge of personal finance products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content independently, without any input from our commercial team or external third parties. We uphold the highest journalistic standards and ethics in everything we do.

Stay up to date with CNBC Select's comprehensive coverage of credit cards, banking, and money by following us on TikTok, Facebook, Instagram, and Twitter.

For rates and fees of the American Express® Gold Card, click here.

For rates and fees of the Discover it® Miles, click here.

by Senitra Horbrook