What’s the difference between credit card fraud and identity theft?

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Have you ever been contacted by your credit card issuer about a suspicious transaction? This typically means a “fraud alert” has been triggered and your bank needs to confirm whether the activity is legitimate. If you didn’t attempt the purchase, you have likely been a victim of credit card fraud.

It’s relatively easy to recover from credit card fraud — typically, your credit card issuer will refund the fraudulent charge and issue you a replacement card with a new number. Besides your card number, credit card fraud doesn’t necessarily mean that your personal information has been compromised. However, if your personal information has been stolen, you have different problems to resolve.

Credit card fraud and identity theft involve the unauthorized use of your information, but they are not the same. Below, CNBC Select explains the differences between credit card fraud and identity theft and some ways you can monitor your personal information.

Compare identity theft protection services

Credit card fraud occurs when unauthorized charges are made using your credit card information. Some ways thieves can obtain credit card numbers include data breaches, stealing your physical card and skimming your card.

Credit card fraud is a type of identity theft. Identity theft differs in that it goes beyond only stealing your credit card number. With identity theft, someone has assumed your identity by stealing your personal information, such as your name, address, date of birth and Social Security number to fraudulently open accounts in your name. 

Recovering from identity is a lot more difficult than just changing your credit card number. It can take years since you need to constantly review your credit to catch and close new fraudulent accounts that may be opened. You may also need to involve law enforcement, deal with debt collectors and replace your IDs.

The good news with identity theft and credit card fraud is that federal laws protect you from liability should you be victimized. 

The Fair Credit Billing Act (FCBA) protects you against credit card fraud, limiting your maximum liability to $50 as long as fraudulent charges are reported within 60 days. 

Credit card issuers have gone beyond the federal protections in offering zero-liability protection, which means you won’t be responsible for any unauthorized charges as long as they’re reported within the FCBA’s 60-day window. Visa, Mastercard, American Express and Discover all have zero-liability protection. Still, you’ll want to confirm that your specific card includes it and 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:

The FCBA is limited to consumer credit cards, so you’ll want to check with your issuer regarding business credit cards as some have extended the zero-liability protection to those cards as well.

When it comes to identity theft, it’s ideal to be aware of potential risks before any damage is done. While there’s no way to guarantee that your identity won’t be stolen, there are many identity theft protection services to help you monitor your personal information and you provide alerts to help prevent you from falling prey to scams and malicious websites. Many of these services also include identity theft insurance, helping you recoup out-of-pocket expenses related to restoring your identity.

CNBC Select recommends Aura if you’re looking for an all-in-one identity theft protection service. It protects against financial fraud, identity theft, spam calls, online theft, phishing and scam websites, viruses and malware, as well as offering security tailored to kids and financial alerts like credit score monitoring. There are plans available specific to individuals, couples and families.

If you’re looking for a combination of credit monitoring and identity theft protection, check out PrivacyGuard. Its combined plan features a free VantageScore, credit monitoring of all three bureaus, alerts and reports, dark web scanning, public records and bank account monitoring and $1 million in identity theft insurance. Separate plans for just identity or credit protection are also available.

While not as comprehensive, a free credit monitoring service can provide basic protection if a paid identity theft service isn’t in your budget. By keeping tabs on your credit report and statements, you can quickly spot signs of suspicious activity, such as new accounts in your name or drastic credit score changes, which could indicate identity theft.

Experian’s free credit monitoring service is great because in addition to real-time alerts about your credit report, it provides a one-time dark web surveillance report upon sign-up.

While credit card fraud and identity theft are similar, identity theft has much more serious repercussions. Problems associated with identity theft can follow you for years while getting a new card is typically all it takes to rectify credit card fraud alone. Fortunately, there are ways to proactively reduce the risk of identity theft, such as using a protection service.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every personal finance article is based on rigorous reporting by our team of expert writers and editors with 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 without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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