Credit Card Fraud
Credit and debit card fraud is a form of identity theft that involves an unauthorized taking of another's credit card information for the purpose of charging purchases to the account or removing funds from it. This theft can occur physically when the actual credit and debit card is taken, or the theft can occur when just the numbers are stolen from an unprotected website or a card reader at a gas station.
Continue on to learn more about credit card fraud, the federal and state laws that apply to it, and the possible penalties you could face if convicted of the crime.
Elements of Credit Card Fraud
Debit/credit card fraud can be committed in a variety of ways, such as when a person:
- Fraudulently obtains, takes, signs, uses, sells, buys, or forges someone else's credit or debit card or card information;
- Uses his or her own card with the knowledge that it is revoked or expired or that the account lacks enough money to pay for the items charged; or
- Sells goods or services to someone else with knowledge that the credit or debit card being used was illegally obtained or is being used without authorization.
State and Federal Laws
Credit and debit card fraud has become a huge problem, and both the states and the federal government have passed laws in attempt to address the problem.
Each state has credit card fraud laws that prohibit the illegal possession and use of a credit or debit card. They have statutes for the physical possession and use of a stolen card. Then there are statutes if just the account number information is stolen, referred to as identity theft. For instance, Alabama Code § 13A-9-14 punishes credit or debit card theft, while § 13A-8-192 punishes identity theft or the possession of identifying information.
Some states have passed more protections that other states. California has been on the forefront of passing numerous laws to try to prevent credit card and identity theft, as can be seen in the following sections from the California Penal Code:
- Section 484e (stealing credit cards)
- Section 484f (forging credit card information)
- Section 484g (fraudulent use of a credit card)
- Section 484h (credit card fraud by a retailer)
- Section 484i (counterfeiting credit cards)
- Section 484j (publishing credit card information)
Federal credit card fraud laws focus on interstate and foreign commerce, making it illegal to use a stolen or fraudulently obtained credit or debit card. The penalties for such use shall be fined not more than $10,000 and/or imprisoned not more than ten years. Here is a list of federal statutes addressing credit card fraud:
- 15 U.S.C. § 1644 (federal fraudulent credit card)
- 15 U.S.C. §1693n (federal fraudulent debit card)
- 18 U.S.C. §1028 (federal fraudulent identity)
Types of Credit Card Fraud
Credit fraud is a broad term for the use of a credit card (or any comparable type of credit) to buy goods or services with the intention of evading payment. While it is simple to understand the physical theft of a credit or debit card from a wallet or purse, today it is much more common to just have information stolen and not the card itself. There are several forms of credit card fraud with new and ingenious methods being devised almost daily. The most common types of credit fraud include:
- Opening new accounts with stolen identification
- Taking over an existing account
- Making purchases without the card being present
- Using a counterfeit card
- Using a fake card
- Using a lost or stolen card
One of the most damaging forms of credit card fraud is identity theft, because once personal identifying information is taken it can be used for numerous fraudulent activities. Several credit card frauds depend on identity theft. If a bad actor steals a person's identifying information they can open new accounts or they can contact credit card companies and change addresses to take over an existing account.
Sometimes the identity theft falls short of stealing a person's complete identity. The thief may just get the number from one card. This sometimes happens when a company has its customer information hacked in a data breach. Companies that store a customer's credit card information sometimes have that information stolen. The thief can then use the credit card number to make telephone or on-line purchases without the credit card being present.
Stolen Credit Card Imprints
It used to be that when you used a credit card an impression of the card was made on carbon paper. Then when the carbon paper was discarded, the credit card numbers could be stolen. That does not happen very often these days, but a modern version of that is electronic credit card skimmers that can read the credit card information from the magnetic strip on the credit card. There are a couple of forms of electronic card skimmers.
One type is a portable reader that can read cards carried in pockets and purses of people as they walk down the street. Another type is a reader that is affixed to a stationary location, such as an ATM machine or a gas station pump. The credit or debit card imprint can then be used to make a counterfeit or fake credit card that will function just like the real thing.
Stolen Credit/Debit Card
Then, of course, there is the old stand-by for credit card fraud and that is the physical stealing of the card itself. A purse or wallet can be stolen, but the card can also be simply lost. There are a number of ways a card can be stolen. They can be taken from mailboxes or as part of a house burglary or a car break-in. A waiter can take in the information at a restaurant. Often, this type of theft will result in a fraud spree, where the perpetrator racks up charges as quickly as possible before the victim has a chance to report the card lost or stolen.
Defenses to Credit Card Fraud
The state and federal laws require that someone has an intent to defraud or steal to be guilty of credit card fraud. Mistakenly using someone else's card or unintentionally using a cancelled or expired card is not grounds to hold someone criminally liable for credit card fraud.
Penalties for Credit Card Fraud
The penalties for credit card fraud are dependent on the facts of the crime and the severity of the offense. If a credit card is stolen but not used, it may be treated as a misdemeanor or a felony. However, the more sophisticated the crime, i.e., counterfeit cards, the more likely it will be a felony with a longer possible sentence.
Credit card fraud that involves the theft of the card or the number typically has a prison sentence of 1 to 5 years. Identity theft is treated much more harshly with prison sentences up to 10 or 20 years. Also, if the thief has the tools of the trade, i.e., credit card skimmers on them when they are caught, there can be additional prison time for those tools.
Have You Been Charged With Debit or Credit Card Fraud? Talk to an Attorney Right Away
If you're facing allegations of debit or credit card fraud, the government is probably working diligently to gather evidence against you. That's why it's important to have a legal defense team in place early to address and challenge any evidence in your case before trial. Get started today and contact an experienced, local criminal defense attorney.