What happens if someone commits debit or credit card fraud? What are the penalties for card fraud? People who commit credit or debit card fraud can face jail time and fines, but the exact penalties vary based on the extent of the fraud, the amount stolen, and the goods obtained. In most cases, as the amount increases, so too does the penalty.
Credit Card Fraud Laws
Credit and debit card fraud takes several forms. Thieves may steal credit card numbers, take the actual card, open new cards in the victim’s name, or commit fraud in other ways. Keeping on top of the different types of fraud from a legislative perspective is impossible, and to contend with that fact, the laws are written quite broadly so that they cover all types of credit card fraud.
In other words, most laws related to credit or debit card fraud simply state that using a card fraudulently is illegal. Then, the laws outline the penalties based on the amounts involved.
Misdemeanor Credit Card Fraud
If the amount stolen is relatively small, for example under $500 or $1000, the fraud is likely a misdemeanor. If caught, the thief may face fines up to $1,000 and up to one year in the county jail. Often, thieves are ordered to pay restitution to cover the losses suffered by their victims.
In some cases, thieves are charged with multiple crimes, including both misdemeanors and felonies. For instance, in New York, a man was charged with a felony for possessing stolen property, a misdemeanor for identity theft, and petit larceny. He stole a card and purchased less than $1,000 in goods.
Felony Card Fraud
In most states, if the thief uses a stolen credit card to buy goods or to get cash over the amount defined as a misdemeanor, the crime becomes a felony. Depending on the situation, thieves may face up to 15 years in prison and up to $25,000 in fines. Again, thieves may also have to pay restitution. Most states have different levels of felonies depending on the state’s identity theft laws.
For example, in Colorado, possessing two or more credit cards illegally is a felony, but the class of felony varies based on the number of cards illegally in the thieves possession. In this state, possessing two or more financial devices (that includes credit cards, debit cards, check books, etc.) is a class six felony, and the penalties are 12 to 18 months in prison, fines of up to $100,000, and a year of parole. If the thief has four or more financial devices, the crime is a class five felony, and the penalty is one to three years in prison, fines up to $100,000, and mandatory parole for two years. Other states have different laws, but they are often structured similarly.
Generally, credit card fraud is a state crime, but in some cases, card fraud falls under federal jurisdiction. There are federal laws related to using devices such as skimmers or counterfeit access equipment to commit the fraud.
In these cases, the Federal Bureau of Investigation (FBI) and the U.S. Secret Service may get involved. For instance, in 2015, two men from California defrauded 119,000 credit card holders. They set up fake businesses and charged people for goods they never received. Then, they transferred money from the businesses’ accounts to individual accounts, and they withdrew cash from those accounts.
The FBI and the Secret Service both got involved with this case, and once they found the thief, they charged him with 24 counts of wire fraud and two counts of mail fraud. Sometimes, credit card fraud falls into other categories, and in fact, this applies to many federally prosecuted cases of credit and debit card fraud.
Unfortunately, finding the people who commit credit or debit card fraud can be challenging. Often, even if the thieves get caught, the money is gone, and the scam artists don’t have the resources to pay restitution. As a result, the financial institution ends up bearing the loss.
To protect your bottom line and your reputation, you need to detect and prevent credit and debit card fraud before the situation escalates and the losses accumulate. We can help. At SQN Banking Systems, we make fraud detection and prevention easy for our clients. To learn about our products and solutions, contact us today.