Is Credit Card Fraud a felony? BF Blog

Is Credit Card fraud a felony?

Does a Credit card fraud case ever result in felony charges? My credit card number has been hacked and/or stolen a few times.  I have never been asked to testify or submit my statement other than to the police. Where are the criminal charges? Is credit card fraud a felony? Is there even a need for criminal defense attorneys in these types of cases?  Let’s do a deep dive to determine if some laws and regulations support the prosecution of a stolen credit card.

Is there enough to prosecute?

So, if a criminal has stolen your account number, is there enough for credit card fraud charges? Is there a “there-there” for credit card theft?  What is the big deal? Is it a stolen thing of value that would require a criminal record?  Can they even catch the criminals to try them for a felony conviction?  However, these are all valid questions that require a deep dive into this type of crime known as a form of identity theft.

Anyone using a credit card without the cardholder’s consent has stolen a credit identity. Here are some statistics on this identity theft from fool.com/The Ascent:

There were 1,686,121 reports of identity theft in 2021.

Those aged 30 to 39 reported the most cases of credit card fraud 108,610 or 28%

Credit card fraud is the 2nd highest type of identity fraud with 389,845 cases. Only Government Documents or Benefits fraud with 396,012 surpasses it.

Of the losses reported by consumers, more than $2.3 billion of losses reported last year were due to imposter scams—up from $1.2 billion in 2020, while online shopping accounted for about $392 million in reported losses from consumers—up from $246 million in 2020.

FTC

Based on these numbers there is plenty of incentives to go after and prosecute these criminals. However, where does most of this crime take place?

Identity Theft By location

Here are the five states that have reported the most identity theft for 2021 statistics from fool.com/the-ascent research:
Texas: 146,111

California: 133,145

Illinois: 117,057

Florida: 110,691

New York: 109,480

I herald from New York and have experience identity theft via a hacker. They had cracked into one of the payment centers and shared my number with multiple people.  Therefore, my account number ended up in the hands of regular people who used it to purchase a gift card, purchase takeout, and they even paid their cable bill. 

Hence, the fraudulent use of a credit card can make its way all over the country without the consent of the cardholder. They only need the card numbers and expiration dates. In most cases, it is up to the card issuer to mediate the damages via their fraud department.  In my case, the financial institution contacted me directly to ask if I had my card in my possession.  The financial transactions that they were seeing were not consistent with my purchase history. However, the damage was done. The credit card issuer canceled the card and I had to dispute all charges that I had not made. Hence, all charges were reversed, and I was not liable for any of the fraudulent charges.  However, I was asked to file a police report to document this crime where my credit card information was stolen.

How do criminals get my information?

Credit card information can be stolen offline as well as online.  Offline methods require copying credit card payment information manually or making counterfeit credit cards. Offline is a type of credit card fraud that is still more common than online.  However, online fraud is gaining as more people shop online.  However, it is much easier to trace online activity.

Offline

Furthermore, even though my experience with credit card theft was in the form of that data breach, there are a variety of ways your identity can be stolen.

When you hand over your credit card to anyone in sales to complete a transaction, the card is out of your sight.  They could copy down your personal information to use later. Hence, this happened to my mom while using her card at a restaurant. Thank goodness the fraud protection at her financial institution’s fraud department was able to catch this debit card fraud before they could wipe out her checking account.

Skimming Devices

A skimming device is another type of offline credit fraud that takes place at the point of sale.  However, in this case, the card reader has been tampered with.  The criminal places the skimming device at an ATM or gas station where this phony reader gathers and sends sensitive information to create a fake credit card to use as desired. Furthermore, this type of credit card fraud can target large groups of people and is very difficult to track the devices.

A friend of mine was hacked by one of these skimming devices while getting gas. She was using her debit card and they took a lot of money out of her checking account before she was aware of the fraud. The bank eventually returned her money. However, I don’t want to deal with the hassle of it. Hence, I switched from using my debit card to a credit card.  It is easier to let the card issuer sort it all out than worry about getting my money back in a timely fashion.

RFID Skimming

This is radio frequency identification technology. It can be used to wirelessly pick up RFID chip-based credit, debit, and ID information directly from the cards.  It can also be used on smartphones and tablets. They can pick up all the unencrypted data from the cards and devices such as numbers, expiration dates, and the cardholder names. However, to safeguard against this type of fraud, the card issuer should encrypt as much of the information as possible. Also, you can buy card sleeves or RFID wallets that block transmissions. You can also, stack your cards together to stop the scanner’s ability to read the information with their scanners. Another option is to wrap your cards in aluminum foil. As a last resort, you can leave cards at home and use cash.

Dumpster Dives

Criminals may go through your trash looking for credit card statements with account information to engage in the unlawful use of a credit card.  I suggest shredding any document that has sensitive information about the account holders.

Shoulder Surfing

Finally, this just requires the theft to watch you type in your code into an ATM or credit card information into a phone or tablet. They can be nearby or far away using binoculars. No special equipment is required for them to steal a person’s credit.

Online Fraud

Nevertheless, even though online credit card fraud is easier to detect it is still a growing problem. With more people making online purchases today, this will likely continue to grow. Phishing schemes can work in a variety of ways. They can be in the form of a phone call, a text message, a fake website, or an email. Let’s discuss each type.

Phishing

Here the criminals are pretending to be a reputable company that calls or emails you to get you to send your personal information.  They may suggest that you give them your banking information for a missed payment.  Furthermore, the criminal may also send you to a fake website to get you to give them control over your accounts by having you provide login credentials. The main objective is to get you to send them money or give them such and such card or banking information to get cash or goods. Please be aware that no financial institution, reputable company, or government agency will ever ask you to provide personal information over the phone or via email.

You can also find fake websites online pretending to be reputable companies.  This happened to my husband while searching for some computer help. He thought he was on the right website but it was a con.  Luckily, he reported it to his credit card company, and the company was phished. Be careful searching the wild, wide web.  

Malware and spyware

This will require you to click on links to download programs that are designed to take over your machine (malware) or spy (spyware) on your computer to get sensitive information. Their main purpose is to steal your information right from your computer. Malware can copy your keystrokes from a contact form and payment forms. Likewise, they also capture your browser information.  It will then send this information directly to the hacker. This information will be used for illegal activity. Be careful of what you download onto your computer. They have gotten very good at imitating legitimate companies. 

Data Breaches

We trust many retailers, financial institutions, and government agencies with our most sensitive information including our social security number. However, they are not immune from being hacked. The earliest recorded data breach began in 2005 and has shown no signs of slowing down. Per Statista Research Department, in the first half of 2022, there were 817 cases of data breaches, data leakage, and data exposure affecting 53 million individuals. This is up from the 1,108 cases in 2021 affecting nearly 50 million people in the U.S. who had their sensitive information hacked per Security Magazine. Hence, there doesn’t seem to be an end in sight here either. Unfortunately, your only recourse is to rely on these institutions to safeguard your information.

Public Wi-Fi

This is using wi-fi in all public places such as hotels, airports, restaurants, retail establishments, parks, etc. Any public wi-fi that shows up on your device can be just a hacker attempting to steal your personal information.  To avoid your information being taken do not conduct any financial transactions or use a VPN – a virtual private network. Therefore, choosing a trustworthy VPN service provider, you pay for is a good idea. These providers are very safe in protecting your sensitive information. They are designed to secure electronic information.

Consequences of Credit Card Fraud

With all these different ways to steal your information and the amount of money involved, I can see how this type of crime is raging. Are there consequences for the crime of credit card fraud? Is anyone held accountable?

Yes, a person can be charged with credit or debit card fraud if they use another person’s credit or debit card information.  They can also be charged for using devices or computers to steal credit card information.  However, these acts are just the tip of the iceberg because other acts can lead to charges.

Hence, if you, a loved one, or a friend has been accused of participating in credit card fraud immediately contact a criminal lawyer. Some may offer a free consultation. A criminal defense lawyer can begin building a strong defense for the charges. However, what types of charges can they be charged for fraudulent use?

The Crimes

  • Theft of a credit card
  • Unauthorized use of a lost or stolen credit or debit card
  • Unauthorized use of stolen credit or debit card information
  • Opening new accounts with stolen credit or debit card information
  • Creating and using counterfeit credit or debit cards
  • Using an expired, revoked, or maxed-out card to try to cover a purchase
  • Creating, using, or transferring data from a credit card skimming device
  • Possessing a certain amount of counterfeit access devices
  • Providing a false statement or stolen information to obtain a credit card
  • Receiving money or valuable goods from someone else’s fraudulent ATM use
  • Receiving a credit or debit card from someone knowing it is lost, stolen, or misdelivered
  • Selling a credit or debit card
  • Purchasing a credit card from someone who isn’t the card issuer
  • Providing goods to someone knowing the card is stolen or counterfeit
  • Possessing incomplete credit or debit cards with the intent to create counterfeit cards without the issuer’s knowledge.

What is the penalty by the largest states mentioned above?

Credit Card Fraud Laws

Depending on the state and the value of the items credit card fraud laws are different for each state.  You can look up your state penal code to determine what is a misdemeanor versus a felony charge.  In most cases, there are severe penalties for felony charges.
Let’s review the top 5 from the list above: Texas, California, Illinois, Florida, and New York

Texas

Under Texas law, credit or debit card fraud is a state jail felony offense punishable by up to two years in jail and fines of up to $10,000. If the offense was committed against an elderly person, the charge may be elevated to a third-degree felony punishable by up to 10 years in prison.

California

In California, credit card fraud penalties can be based on the amount of money involved. Fraudulent damages under $950 are considered petty crime and amounts above $950 are considered grand theft. 

Depending on the severity of the crime anyone can be charged from one year in county jail and a $1,000 fine to three years in jail with a $10,000 fine.

However, these penalties cover fraudulent use of an access card or account information and fraudulent retail transactions. They also cover fraudulent possession and transfer of credit cards, forging credit card information, counterfeiting credit cards, and publishing credit card information where there may not be damages tied to an actual transaction. However, the severity of the crime will determine whether the crime is a misdemeanor or a felony

Illinois

The exact punishment will depend upon the number of victims, prior conviction for fraud offenses, the dollar value of the fraud, and the exact crime committed.

However, the penalties for many crimes falling under the Illinois Credit and Debit Card Fraud Act have recently been increased. Class 4 felonies are punishable by one to three years in prison and fines of up to $25,000. Also, probation is an option for Class 4 felonies, but it will require a lot of time and come at a financial cost. Failure to comply with the terms of your probation can result in prison time.

Class 3 felonies are punishable by two to five years in prison and a $150,000 fine. Class 2 felonies can result in jail time of three to seven years and fines of up to $200,000.         

Most credit card offenses are considered felonies.

New York

New York penal law prohibits possessing a credit card that has been forged, altered, or is a fraudulent copy. These acts are considered Criminal Possession of a Forged Instrument in the Second Degree and are considered a Class D felony which can result in up to seven years in prison.

However, if you steal or possess the stolen credit card it is considered a Class E Felony. This crime is punishable by no mandatory minimum sentence for first-time offenders. Therefore, you could go to prison for up to one and one-third to four years.  The maximum sentence is two to four years in state prison. Furthermore, this jail time can be escalated because it is based on the number of cards in your possession. Hence, if you have three stolen cards you go to jail for up to 12 years as you will be charged separately for each card. It is a felony to possess a stolen credit card.

Federal Law

Under federal law, a person convicted of credit or debit card fraud can be sentenced to up to 15 years in prison. If it is the person’s second or subsequent offense, he or she can face up to 20 years of imprisonment. Credit Card fraud becomes a federal crime when it “affects interstate or foreign commerce” per NerdWallet.com.

Criminal Defense

For whatever reason, if you are found in possession of a stolen credit card or stolen or lost credit card information or skimming devices consult a criminal lawyer.  Many provide free consultation and protection under an attorney-client relationship. Therefore, feel free to share all information regarding this crime. Hence, at this time there is no advantage to providing a false statement. The criminal defense lawyer will assess the case in terms of state and federal law. However, based on the value of the items, and the number of counterfeit cards, the lawyer will determine the criminal laws broken, whether it is a petty crime or how severe the penalties will be. The lawyers will review the law enforcement statement and state statutes and penalties regarding credit card crimes.

To build a strong defense the lawyer will review the value of the property stolen, the criminal intent, and if there were any financial transaction devices involved. The lawyers will need to determine if there are state and/or federal criminal violations. Hence, the defense will need to determine whether these are misdemeanor or felony charges.  Also, if there is any reasonable doubt for all criminal cases against you. This is the best way to mitigate the prison sentence that may result in extended jail time and other possible penalties.

How can you protect yourself?

There are several steps you as a credit card holder can take to protect yourself against unauthorized use of a credit card. Here is an action list.

Things you can Do

  • Beware of phishing campaigns designed to steal your information
  • Never give anyone your social security number or banking information before verifying their credentials
  • Do not click on links randomly emailed or texted to you from anyone
  • Install antivirus and antimalware software on all computers and mobile devices
  • Use a VPN – virtual private network
  • Only use websites that require CID or CVV Code on your credit card – Learn more here.
  • Only use secure websites with HTTPS:// in the URL
  • Use two-factor authentication for added protection
  • Update your passwords regularly
  • Do not share your credit card or credit card information with unauthorized users
  • Freeze your credit and debit cards on your banking app
  • Freeze your credit card reports if you are not actively looking for credit
  • Do not use public WIFI when using your credit card or any sensitive or personal information
  • Don’t store credit card information on websites
  • Check for skimming devices at retail establishments, especially gas stations
  • Use RFID Credit card protective sleeves and wallets
  • Shred all documents with your personal and sensitive information
  • Monitor your credit reports
  • Check your bank and credit card statements
  • Use credit apps to help you monitor your credit activity
  • Set up alerts for a card, not present transactions
  • Be aware of your surroundings when using your credit card

Therefore, it is always in your best interest to do all that you can to protect your personal information.

Final Note

Most of this is for general information purposes.  However, if you find yourself or someone you know under investigation consult a criminal lawyer to develop a successful defense. Equally important, if you are a victim of identity fraud contact the card issuer immediately.

Additional Reading:

How To Manage Credit Card Debt

What Hurts Your Credit Score The Most?

How To Raise Your Credit Score 100 Points in 45 Days

4 thoughts on “Is Credit Card fraud a felony?”

  1. Lisa, Casey, Barrett Dog

    Wow! That’s a high number of credit card /identity theft. We only knew a few of these, thank you for sharing.

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