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Credit card fraud and identity theft are two terms you’ve probably heard before. And if you’re unlucky, you might even become a victim of one of these two crimes yourself.

However, credit card fraud and identity theft are not the same. Both can involve the theft of your information, but one is easier to prevent and recover.

Read on for a look at how credit card fraud and identity theft differ. Plus, I’ll give some tips on how to recover from these crimes if the bad guys ever get their hands on your personal information.

Credit card fraud

Have you ever been contacted by a credit card issuer about a suspicious transaction that you did not authorize? Or have you ever checked your credit card statement to find charges you didn’t charge? If you answered yes to any of these questions, you may have been a victim of credit card fraud.

This The FBI defines credit card fraud “The unauthorized use of a credit or debit card, or similar payment instrument (ACH, EFT, recurring charge, etc.), to fraudulently obtain money or property. Credit and debit card numbers can be stolen or obtained from unsecured websites. In an identity theft scheme.” “

Technically, credit card fraud can be classified as a type of identity theft. However, it’s not really the same as stealing your identity.

Sure, finding out if someone has stolen your credit card information can be difficult. It can be upsetting to find out that a thief used your account to pay for unauthorized purchases. Credit card theft, however, is generally much easier to prevent and fix than other forms of identity theft.

For example, TPG credit card writer Danyal Ahmed compromised the Chase Sapphire Reserve® within two days of receiving the card in 2016. The first time he used his card to pay for a meal at a restaurant, and soon after in-person transactions, his card had nearly $10,000 in unauthorized charges.

See below for tips on how to handle credit card fraud if you experience it.

identity theft

Identity theft is a term professionals use to describe something worse than a few unauthorized charges on your credit card account. According to the FBI“Identity theft occurs when someone assumes your identity to commit fraud or other criminal acts.”

How do criminals get the information they need to identify you? The FBI explains that crooks can obtain your personal information from a variety of sources, such as:

• Steal your wallet
• Rifling through your garbage
• Compromise your credit or bank information
• Contacting you (in person, by telephone or on the Internet) to ask for information.

This is called when someone steals your personal identifying information (eg, name, address, social security number, date of birth, etc.) and uses that information to open a fraudulent account in your name. Real name fraud. When most people say they’ve had their identity stolen, real name fraud is the crime they’re really referring to.

Unlike credit card fraud, real name fraud can haunt you for years. Trying to recover from identity theft can be a much bigger ordeal than simply changing your credit card number to stop the thief. Fortunately, there are federal laws designed to protect victims of identity theft.

See below for tips on how to recover if you experience identity theft.

Credit Card Fraud Recovery

If someone uses your credit card without your permission, my first piece of advice is not to panic. Thanks to federal law, you’re actually well protected from fraud liability.

In fact, as long as you report fraudulent charges promptly (within 60 days), you will not be held liable for fraudulent transactions.

Here’s a look at the two main federal laws that protect you from credit card and debit card fraud.

• Fair Credit Billing Act (FCBA): This The FCBA limits your liability for fraudulent credit card transactions to a maximum of $50. Just don’t drag your feet. To enjoy this protection you must report any unauthorized charges to your card issuer within 60 days. As a matter of customer service, all four major credit card networks currently have zero-liability fraud policies. This means that if you report fraudulent transactions to your card issuer immediately, you may not pay a dime out of your own pocket.
• Electronic Funds Transfer Act (EFTA): EFTA will limit your liability for debit card fraud to no more than $500 ($50 if you report the fraud within two business days). In addition to higher liability limits, debit card fraud can be more painful for other reasons. Unlike credit card fraud, when debit card fraud occurs it is your personal money that the thief steals. As a result, funds in your bank account may be frozen and unavailable for use while your bank investigates any unauthorized activity.

As you can see above, debit card fraud protection is not as strong as credit card fraud protection. This is one reason why I advocate that most people choose credit cards as their go-to payment method over debit cards. The key here, of course, is to make sure you can commit to paying off your balance in full each month.

Related: TPG’s 10 Commandments of Credit Card Rewards

Recovering from Identity Theft

If someone steals your credit card information, you can report the fraud to your card issuer and they will close the account. Unless that thief can access your new card number (hint: your Online passwords are often extra secure), the ordeal should be over.

That is not true when your personally identifiable information is stolen.

You can’t exactly change your social security number and your date of birth to prevent crooks from using your information for their own personal gain. But the good news is that you can make it much harder for the bad guys to profit from your personal data.

Here’s how.

• Place fraud alerts on your credit reports with Equifax, TransUnion and Experian: The Fair Credit Reporting Act (FCRA) gives you the right to place free fraud alerts on your credit reports with all three major credit bureaus. When you raise a fraud alert, it tells lenders that they should contact you first to confirm your identity before opening any new credit accounts in your name.
• Freeze your three credit reports: With a fraud alert, a lender should ask your permission before opening a new account in your name. This leaves little room for possible human error. With a credit freeze, on the other hand, new lenders can’t access your reports unless you Allow viewing of your reports. (This is accomplished by “thawing” your reports in advance with a PIN code or password.)
• Check your credit reports frequently for signs of fraud: The FCRA allows you to expect only accurate information to be included in your credit reports. However, it is up to you to verify that your reports are indeed error-free. If you haven’t claimed your three free credit reports from AnnualCreditReport.com in the last 12 months, that’s a great place to start. In addition to that, I recommend checking your credit reports at least once a month as an added safety measure. (Tip: Checking your own credit report will never hurt your credit score.)
• Report identity theft immediately to: If you are a victim of real name fraud, it is important to immediately report the fraudulent account to the three credit reporting agencies. You can visit the Federal Trade Commission’s IdentityTheft.gov to make a report. Once completed, send your identity theft report to Equifax, TransUnion and Experian. According to the FCRA, credit reporting agencies must block fraudulent information from your credit reports within four business days of receiving your identity theft report.

Being proactive is the key

Regardless of whether you are a victim of credit card fraud or identity theft, it is important to be proactive. You can’t expect your card issuer or credit reporting agencies to detect fraud on your behalf (although sometimes you might get lucky). It is your responsibility to ensure that your credit reports and credit card statements contain accurate information.

Make it a habit to check your credit card statement and your three credit reports every month for mistakes, errors, and fraud. If you notice suspicious activity, remember that you are protected by federal law as long as you report the problem immediately.

The bottom line

Although both credit card fraud and identity theft are dire situations, you can recover quickly from credit card fraud thanks to federal laws and zero liability protection on credit cards. On the other hand, identity theft is a much bigger problem where your personal information, such as your SSN, date of birth, and address, is compromised. In any case, report suspicious activity to your credit card issuer and credit reporting bureaus immediately to ensure you are protected.

Related: How to Check Your Credit Score for Free