Credit card customers are not usually liable if their account is involved in fraud, unless they have been negligent. Negligence could include for example disclosing a PIN number or keeping a PIN number with their card. Credit card companies will take note of any unusual transaction on the account and contact customers to check the spending is genuine (this will not affect your credit rating).

In order to avoid fraud it helps to be aware of the methods used by fraudsters to obtain and misuse credit cards.

What is credit card fraud?

Counterfeit fraud – this is the most common type of card fraud. The data on the magnetic strip on a credit card can be copied electronically onto another card in a process called skimming. This is most likely to happen at cashpoint machines, shops, bars, restaurants and petrol stations. The card holder will be unaware that skimming has occurred. It is hoped that skimming will be reduced now that the more secure chip and pin system has been introduced.

Loss or theft of cards – if you lose your card or it is stolen it is most likely to be used in the first few hours. Therefore it is important to report the loss immediately to the company and the police.

Interceptions in the post – new cards and cheque books can be intercepted while in the postal system. If you are expecting a card/cheque book and it is not delivered then you should inform the bank.

Theft of account details – it is recommended that any paperwork which shows account details should be shredded. This could include statements, receipts and store cards. Details obtained from rubbish bins can then be used where the cardholder is not present, for example mail order and internet transactions. The cardholder may be unaware of any problem until their statement arrives.

Identity fraud – Personal documents and other items such as utility bills can be stolen and used to take over your identity. You should therefore be careful about how you discard unwanted items. It is best to destroy personal documentation. Be warned that your credit rating can be affected if you are a victim of identity fraud. Credit reference agencies can provide a copy of you annual credit report if you are concerned about this possibility. You will then be able to see if accounts have been opened using your name.

Cashpoint fraud – cards are often stolen along with their PIN number. When using a cashpoint machine make sure that nobody can see you entering the PIN number. Put your card and cash away safely before leaving the cashpoint and keep any printed items to discard safely later. If you suspect the machine has been tampered with or the machine does not return your card, then contact the bank immediately.

Steps you can take to protect yourself from fraud

There is a lot you can do to keep your card safe and reduce the risk of fraud.

Firstly don't carry your cards in a pocket or on the top inside a bag where they can be stolen more easily.

You should never tell anyone your PIN number even if they claim to be the card issuer or police. Also never write the PIN number down and carry it with you.

When using a cash machine be aware of anyone talking to you and possibly trying to distract you as they may be watching out for your PIN number.

Keep your card company's lost and stolen contact number to hand so that you can report any loss or theft immediately. Also remember to take the telephone number with you if you travel abroad.

Do not lose sight of your card or leave it where details could be copied. For example in a restaurant the waiter should bring the terminal to the table or you should go to the till.

Always check your statement when it arrives and report any unknown transactions to the card company. If you keep your details with the company up to date then they will be able to contact you immediately if they suspect any misuse of your card.

Is it safe to use credit cards online?

Millions of people in the UK now use the internet to shop regularly online but many also wonder how secure the internet is. As long as you are careful and take some simple precautions, shopping on the internet can be safe as well as convenient.

Firstly only use websites you know you can trust because they are well known or have been recommended. Make sure you know who the seller is by asking for a telephone number and postal address but do not accept a mobile number or a post office box number. It is unusual for credit card fraud to be the result of computer hackers breaking into a system and stealing card details. As with phone and mail order fraud, internet fraud mostly happens because a credit card has been lost or stolen so the most important thing is to keep your card safe. Remember you should still sign the signature strip on the back of the card even though most now use the chip and PIN system. Never be tricked into revealing your PIN number or passwords to online accounts. It can be easy to respond to unsolicited emails, phone calls or cold callers without realising that the real reason for the call is to obtain information useful to criminals.

When you are shopping online you may well be given the chance to use a scheme involving use of a password. For example Verified by Visa (www.visaeurope.com/verified) or MasterCard SecureCode (www.mastercard.co.uk/securecode). You should accept the offer to sign up to one of these schemes. If a fraudster does not know your password they will not be able to use your card details on any internet shopping sites participating in the scheme.

You should also take care to only use secure websites for shopping. Your browser window should display a security icon at the bottom of the screen before you enter any credit card information. When you submit an order using a secure connection the beginning of the website address will change from “http” to “https”.

It is vital to protect your computer and ensure it is secure. Simple steps such as using a start up password rather than an automatic login feature all help. You can disable any browser option that remembers your username and password and also file sharing software. This will mean that only you have access to your computer and the data stored on it. Make sure your computer has the latest anti-virus software and a firewall installed and set your browser to the highest level of security notification and monitoring. When you install your computer these safety options may not be the default. The most widely used browsers have websites with the latest version available to download.

When shopping online it is a good idea to print out your order and also to keep copies of terms and conditions, returns policy and so on. If there is a problem with the order you will then have all the relevant information to hand when contacting your card company. This is particularly important if you are buying from abroad as it can be more difficult to sort out any problems.