Credit card fraud encompasses schemes to use credit cards or credit card information without authorization. The offense ranges from individual unauthorized purchases to sophisticated data breach operations. Both federal and state laws criminalize credit card fraud with penalties varying based on amount, scope, and methods.
Types of Credit Card Fraud
Card-present fraud uses physical cards obtained through theft, counterfeiting, or deception. Stolen wallets, pickpocketing, and mail theft provide cards. Skimming devices capture data for counterfeiting.
Card-not-present fraud uses card numbers for online, phone, or mail order purchases. Data breaches, phishing, and malware provide numbers. No physical card is needed.
Account takeover involves gaining control of existing accounts. Criminals change passwords, addresses, and contact information. They order new cards and make purchases.
Application fraud uses stolen or fabricated identities to open new accounts. Synthetic identity combines real and fake information. New accounts are maxed out and abandoned.
Bust-out schemes build credit history before massive fraud. Accounts are paid responsibly until high limits are achieved, then exhausted with no intent to pay.
Federal Criminal Statutes
Access device fraud under 18 U.S.C. § 1029 criminalizes fraud using credit cards, account numbers, and other access devices. Penalties increase with the number of devices and loss amount.
Wire fraud under 18 U.S.C. § 1343 applies when electronic communications further the scheme. Emails, phone calls, and internet transactions provide wire fraud jurisdiction.
Identity theft under 18 U.S.C. § 1028 criminalizes using another person’s identification. Aggravated identity theft adds mandatory consecutive sentences.
Bank fraud under 18 U.S.C. § 1344 applies when schemes defraud financial institutions. Credit card issuers are typically banks covered by the statute.
RICO charges apply to organized credit card fraud operations. Pattern of racketeering activity through fraud predicates supports RICO prosecution.
State Criminal Charges
State credit card fraud statutes vary in elements and penalties. Most states specifically criminalize unauthorized credit card use.
Theft charges apply when credit card fraud constitutes theft of money or property. Value of stolen funds determines offense level.
Identity theft is separately criminalized in most states. Using another’s identity for credit card fraud triggers identity theft charges.
Forgery charges may apply when signatures are forged or documents are falsified.
Organized retail crime statutes target large-scale fraud rings operating across merchants.
Defenses
Authorization or consent negates the crime. Permitted use of another’s card is not fraud. Scope of permission matters.
Mistaken identity challenges whether the defendant committed the fraud. Someone else may have used the defendant’s information or committed the crimes.
Lack of knowledge that the card was stolen or use was unauthorized negates intent. Unknowing possession of a fraudulent card is not fraud.
Entrapment applies when government induces offense the defendant was not predisposed to commit. Undercover operations may cross the line.
Constitutional violations may suppress evidence. Unlawful searches, Miranda violations, and other constitutional breaches affect admissibility.
Investigation and Prosecution
Secret Service investigates access device fraud. The agency has primary federal jurisdiction over credit card crimes.
FBI investigates large-scale fraud, identity theft, and schemes with other federal violations.
Postal Inspection Service investigates mail-related fraud. Card theft from mail and fraud through mail order trigger postal jurisdiction.
State and local police investigate individual fraudulent transactions and local fraud rings.
Cooperation with investigation can reduce exposure. Early engagement and assistance to investigators may influence charging and sentencing.
Civil Liability
Victim restitution is ordered in criminal cases. Defendants must repay losses caused by their fraud.
Civil suits by victims seek damages beyond criminal restitution. Negligence by merchants or processors may create additional liability.
Chargeback disputes between cardholders and merchants are separate from fraud prosecution. Merchants bear losses from fraudulent transactions in many circumstances.
Data breach litigation holds companies responsible for security failures. Class actions seek damages for compromised card data.
Cardholder Protections
Federal law limits cardholder liability for unauthorized charges. Liability for credit cards is capped at $50, often waived by issuers.
Zero liability policies offered by major networks eliminate cardholder responsibility for fraud.
Dispute procedures under the Fair Credit Billing Act provide mechanisms to challenge unauthorized charges.
Credit monitoring after fraud helps detect additional unauthorized activity. Fraud alerts and credit freezes provide protection.
For Service Members
Credit card fraud affects service members as victims, as targets of fraudulent schemes, and occasionally as defendants.
Identity theft targeting military is common. Criminals use military personal data obtained through various breaches and schemes.
Deployment creates vulnerability. Overseas service members may not detect fraud promptly. Monitoring accounts becomes difficult.
SCRA protections may affect fraud investigation timelines. Deployed service members may be entitled to stays of proceedings.
Military justice applies to service members who commit fraud. Credit card fraud violates UCMJ and can result in court-martial.
Security clearance is affected by fraud involvement. Both being a victim and being a perpetrator create clearance concerns.
Financial counseling through military services helps fraud victims. Military OneSource and base legal assistance provide support.
Government travel card fraud is specifically prohibited. Misuse of GTC for personal purchases violates regulations and potentially criminal law.
A military attorney understands how credit card fraud affects service members, UCMJ implications for fraud by service members, and how to address fraud victimization during deployment.
Disclaimer
This article is provided for general informational and educational purposes only. Nothing in this article constitutes legal advice, and no attorney-client relationship is formed by reading this content.
Credit card fraud is a serious criminal offense with federal and state implications. Penalties depend on loss amounts, number of victims, and sophistication. The information presented here may not reflect current law or apply to any specific situation.
Do not rely on this article to make legal decisions. If you are under investigation for or charged with credit card fraud, immediate consultation with a qualified criminal defense attorney is essential.
The authors, publishers, and distributors of this content expressly disclaim any liability for actions taken or not taken based on this information. Reading this article does not create an attorney-client relationship with any person or entity.
For service members facing fraud allegations or victimized by fraud, the intersection of military status with criminal and civil proceedings requires counsel familiar with both areas.