How Do Credit Card Companies Investigate Fraud?

Categories: Criminal Defense

Note: This article has been refreshed and revised as of February 28, 2024, to ensure the information remains current and accurate.

In the ever-evolving battle against credit card fraud, understanding the investigative processes of credit card companies is crucial for both prevention and resolution.

Key Takeaways

  • Investigative Processes: Credit card companies deploy specialized investigators to handle fraud reports, focusing on various scenarios like travel alerts, lost or stolen card usage, and online fraud.
  • Legal Ramifications in Colorado: Credit card fraud encompasses unauthorized possession or use of a financial device, with penalties ranging from misdemeanors to felonies based on the fraud’s scale.
  • Consumer Actions: Immediate reporting of unauthorized transactions is vital, with the investigation process kicking off within 30 days and potentially lasting up to 90 days.
  • Legal Support: For those entangled in credit card fraud allegations or investigations, seeking skilled legal counsel, like Mark S. Rubinstein, P.C., is essential for navigating the complexities of the legal system.

Mastering the Legal Nuances of Credit Card Fraud Detection and Defense at Mark S. Rubinstein, P.C.

If you’re a credit card user, the world of credit card fraud might not be entirely unfamiliar. Every year, credit card companies invest millions in thwarting fraudulent transactions in their customers’ accounts. Now, here’s the twist – the way credit card companies dig into fraudulent activities is a whole different ball game compared to law enforcement. Ever wondered how they pull it off?

Worry not; Mark S. Rubinstein, P.C. is here to break down the nitty-gritty of credit card company investigations. If you find yourself tangled in the complexities of a credit card fraud investigation in Colorado or facing the heat of an alleged fraud investigation, you’ll want a legal pro who knows the ropes. Lucky for you, our criminal defense team has got your back. Drop us a line today, and let’s tackle this together.

Credit Card Fraud Statistics

The number of credit card fraud investigation reports in the United States has skyrocketed in the past decade. According to the Federal Trade Commission (FTC), credit card fraud is currently the most reported form of identity theft.

The FTC describes credit card fraud as when someone misappropriates your credit card information to make purchases or applies for a credit card in your name. In 2022, the FTC received 441,882 reports alleging they were victims of credit card fraud. U.S. states with the highest rates of identity theft include Georgia, Louisiana, Florida, Delaware, and Nevada. Colorado ranks 27th in identity theft reports, with credit card fraud making up 40% of the state’s identity theft reports. 

What Do Credit Card Companies Do to Investigate Fraud?

Credit card companies hire multiple fraud investigators whose primary responsibility is investigating reports of fraud. A credit card company’s fraud investigation largely depends on whether the credit card owner is aware of the fraudulent transactions and reports them to the company. 

Travel Alert

A common fraud alert that the credit card company initiates arises when you travel across the country and start making multiple large purchases without notifying your credit card company. In this scenario, your credit card company may lock your card and send you an alert, ensuring you are aware of the purchases. While the fraud alert can inconvenience your travel, it can prevent thousands of dollars in credit card fraud when your credit card company successfully locks your card as soon as they detect suspicious activity. 

Use of a Lost or Stolen Card at a Store

If someone uses a stolen or lost credit card at a brick-and-mortar establishment, the person alleging the fraud must report the issue. They may offer proof of their location, so the credit card company knows the authorized user did not use the card. To prevent this form of credit card fraud, credit card companies typically ask users to report their card as lost or stolen as soon as possible to prevent misuse.

Online Shopping Credit Card Fraud

In most cases of credit card fraud, someone uses another person’s credit card information to make a purchase online or by phone. The credit card company will not investigate until the authorized user reports an unauthorized charge. 

The Credit Card Fraud Investigation Process

If an authorized credit card user notifies their credit card company of a fraudulent transaction, the company takes steps to investigate the claim’s veracity. The credit card company must  respond to your fraud report and start its investigation within 30 days of the report. However, it can take up to 90 days to investigate the complaint. If the credit card company confirms an unauthorized party made the charge, the fraud victim will likely get their money back. 

What Happens If a Credit Card Company Catches Fraudulent Activity?

The result for the person accused of credit card fraud typically depends on the magnitude of the fraud and whether the same person has other allegations against them. The credit card company’s investigator may notify law enforcement officials of large-scale attempts at credit card fraud or schemes that appear to be a pattern. If the credit card fraud target knows who used their credit card without permission, they can report those allegations directly to the police. This may result in an arrest and criminal fraud charges.

Criminal Charges for Credit Card Fraud in Colorado

At its basic level, credit card fraud is a form of theft—taking or using another person’s property without their permission. Accordingly, Colorado criminalizes the unauthorized possession or use of a credit card. 

Criminal Possession of a Financial Device

Criminal possession of a financial device is the act of possessing a credit card you know or reasonably should know is lost, stolen, or delivered by mistake. For example, if you find a credit card on the ground or a card is mistakenly delivered to your address, you must return it to the bank listed on the card to avoid facing criminal charges. 

Criminal possession of a financial device is a class 2 misdemeanor. A class 2 misdemeanor carries the potential punishment of up to 120 days in jail and a fine of up to $750. 

However, the penalty is greater if you are accused of possessing more than one credit card. Criminal possession of two or more financial devices is considered a class 6 felony. A class 6 felony carries the potential punishment of between 12 and 18 months in jail and a fine of between $1,000 and $100,000.

Unauthorized Use of a Credit Card

The unauthorized use of a financial device is the name of the criminal offense of the unauthorized use of a credit card. The penalties for unauthorized use of a credit card vary based on the value of the fraud. The amounts and associated charges of the fraud are as follows:

  • A class 2 misdemeanor for more than $300 but less than $1,000;
  • A class 1 misdemeanor for more than $1,000 but less than $2,000;
  • A class 6 felony for at least $2,000 but less than $5,000;
  • A class 5 felony for at least $5,000 but less than $20,000;
  • A class 4 felony for at least $20,000 but less than $100,000;
  • A class 3 felony for at least $100,000 but less than $1,000,000; and
  • A class 2 felony for $1,000,000 or more.

Penalties range from 120 days in jail and a fine of up to $750 for a class 2 misdemeanor to a fine of $1,000,000 and a prison sentence of eight to 24 years for a class 2 felony. Plus, if someone commits unauthorized use of a credit card twice within six months, the value of the incidents is combined and charged as a single event.

Do Banks Dig Into Every Case Of Credit Card Fraud?

Upon detecting a suspicious transaction, financial institutions promptly engage specialized investigation teams. Imagine a scenario where adept financial and cybersecurity experts meticulously sift through the digital traces of your purchases. Acting as virtual detectives, they utilize account-specific protocols to pinpoint the origin of the suspected fraud. The primary objective is to meticulously trace virtual footprints, unveiling the details of the dubious activity, including the actors involved, the nature of the fraud, and its origin.

Facing Credit Card Fraud Investigation? Contact Mark S. Rubinstein, P.C.

If you have questions about credit card fraud investigations in Colorado or are under investigation, a criminal defense attorney at the law offices of Mark S. Rubinstein, P.C., can answer your questions. You are more than a case number—you are a valued client whose freedom and reputation are worth protecting. My extensive experience representing individuals accused of crimes allows me to handle a wide variety of different cases. I understand the nuances of the Western Colorado court systems and have worked with the local prosecutors on many occasions. Contact Mark S. Rubinstein, P.C. today.

Mark Rubinstein

Attorney Mark S. Rubinstein has been practicing law for more than 30 years, including 25 years in Colorado. He founded Mark S. Rubinstein, P.C., in Carbondale after working for law firms in Denver and earlier in his career in San Diego. He focuses his practice in the areas of criminal defense and personal injury representation, and he is well known throughout western Colorado as an effective and unwavering advocate for his clients.