Credit Card Fraud Penalties

Have you ever got a credit card bill that listed buying from places you have never been, listing such a huge credit card debt, which could easily give you a heart attack? Then you have been a victim of fraud and you know how frustrating it is. Credit card fraud is any theft or fraud committed by using a stolen credit card for payment. It is classified as theft of identity. It is taken as a serious crime by the federal law and involves serious penalties.

The degree of these fraud penalties are decided according to the degree of fraud committed by the person or persons. You will be surprised to know, that credit card frauds, every year, cost from millions to billions of dollars to credit card companies and merchants combined.

In the United States of America, the merchants from whom the items were purchased using a false credit card, have to pay for cost of the fraud. In fact a merchant has to pay an extra chargeback fee too in some cases. In many other countries, the credit card companies take responsibility and pay the cost of fraud. In very few countries, the true card holder himself has to face the brunt and pay the cost.

Nature of Credit Cards and Investigation

In the United States of America, credit card fraud is a very rampant phenomenon, as the use of credit card is very high. Although victims are compensated and acquitted from a responsibility to pay, the rate of these fraudsters being caught is surprisingly very low.

The United States secret service, is the agency that looks into fraud investigation related to credit cards. There is a rule in US that, unless the fraud exceeds $150,000, the FBI does not step in to investigate. Credit card fraud has to be reported to the 'Federal Trading Commission(FTC)' and to the local police of course. The federal trading commission looks into or investigates only frauds exceeding $2000. The fraudsters take advantage of this and resort to buying low cost items from many different stores at a time. Thus they avoid getting investigated by the FBI or the FTC. However, there is an increasing demand for stricter laws to deal with these fraudsters and an effective investigative machinery that could nab them. The credit card companies themselves have taken measures to prevent fraud, by providing merchants with online verification systems.

The laws for penalties, like all other laws in US laws, vary from state to state and in some cases from city to city. The credit card penalties range from 15 days in prison to a maximum of 20 years in prison, depending upon the scale of the fraud, seriousness of the crime and other violations committed. The penalties range up to $10,000 in fine.

Every where credit cards are replacing hard cash. The use of plastic money has increased, which has subsequently led to an increase in credit card fraud crimes. The best way to prevent credit card crime is to protect it and keep it safe at all times. If your credit card is stolen, it is essential that you immediately report its stolen status to the credit card company and local police. Normally, a card holder is only charged with $50 fine, if he has reported the card being stolen. It is a good practice to keep the credit card debt at a minimum. Although fraud penalties are in place, it is good practice to be alert and prevent scoundrels from taking advantage of your name, at all costs.