What is a Virtual Credit Card?

Online shopping has opened up a new world of convenience for busy multitaskers and shopaholics alike. The U.S. Census Bureau reported a 3.9% increase in e-Commerce sales in the second quarter of 2018, bringing online sales to $127.3 billion.

With services offering to deliver your groceries, toiletries, and revamp your closet – it’s hard to turn back from online shopping. But with more spending options and the ability to shop without having a card present, your credit card may be at risk for credit card fraud.

With data breaches impacting their customers, credit card companies are making efforts to be more vigilant against fraud. One of the ways credit card companies and outside financial services are doing this is by offering virtual or temporary credit cards to help protect their customers. Let’s take a look at what a virtual credit card is, how it can protect you from credit card fraud, and who may benefit from a virtual or temporary credit card.

Already thinking about getting a virtual credit card? Use the links below to navigate to specific topics.

• Tapping into Virtual Credit Cards
  • What Is a Virtual Credit Card?
  • How Do I Get a Virtual Credit Card?
  • How Do I Use a Virtual Credit Card?
• Virtual Credit Cards and Fraud Prevention
  • What to Do If Your Credit Card Information Has Been Compromised
  • How Else Can I Protect Myself from Other Types of Financial Fraud?

• Is a Virtual or Temporary Credit Card Right for Me?
• The Takeaway: Virtual Credit Cards

Tapping into Virtual Credit Cards

What Is a Virtual Credit Card?

Virtual credit cards, as their name implies, are not actual credit cards – but rather single-use numbers issued by your credit card company or virtual credit card service. Similar to credit card chip technology, a dynamic number is issued to the credit cardholder for one-time use when processing a transaction online. Once used, the number is no longer valid. This can help consumers protect themselves from hackers obtaining the shopper’s actual credit card information and using it for additional, unauthorized purchases.

With recent retail store data breaches, like we saw with Marriott in 2018, many consumers are opting for virtual credit card numbers to help protect themselves when making online purchases.

How Do I Get a Virtual Credit Card?

Virtual credit cards are becoming increasingly popular and many credit card companies have started implementing virtual card services to help protect their customers. Check with your preferred creditor to determine if a virtual credit card is available.

Capital One has rolled out their Eno℠ service that’s free for Capital One cardholders. Each credit card company issues virtual credit cards differently – so talk with your credit card company to see how they handle temporary cards and fraud protection. If your creditor does not offer this service, consider doing some research on third-party virtual credit card providers.

How Do I Use a Virtual Credit Card?

Each virtual credit card service is different, so you may need to consult your credit card company for specific instructions before starting your online shopping. Capital One’s Eno uses an application that will prompt you to log in as you are getting ready to complete an online transaction

Once you’re logged in, it will generate a unique card number for you to use and the application will note which credit card your virtual card number is associated with, so you can see where to expect the charges to be reflected.

Virtual Credit Cards and Fraud Prevention

Chip technology has helped reduce fraud at the point-of-sale transaction, but hackers are have moved onto targeting online shoppers with card-not-present theft. TransUnion reports that hackers have adapted to e-Commerce fraud with new software and the ability to tap into consumer credit card accounts without a card being present – and through mobile payment applications. Hacking software enables fraudsters to test sets of credit card numbers to identify valid accounts.

It’s important to know what to do if your credit card information has been accessed by an unauthorized user and to continue to take steps to prevent your credit card details from being vulnerable to theft.

What to Do If Your Credit Card Information Has Been Compromised

Virtual credit cards are just one way to help protect yourself from online fraud – but what do you do if your account information has already been compromised? Credit card and identity fraud can cause significant financial challenges depending on the charges and can impact your credit score if not handled properly.

If you believe your credit or debit card information has been compromised, the Consumer Financial Protection Bureau recommends taking the following four actions to both prevent credit card fraud, and to address it.

1. Check Your Credit and Debit Card Statements Regularly

Thanks to mobile applications and online portals, it’s easy to check your statements regularly. This can help you identify any suspicious charges on your account, and can help you use your credit card responsibly. Pay attention to any unrecognized charges, and take action quickly.

2. Report Suspicious Activity Immediately

If you notice any charges that you don’t recognize, you should report them as soon as possible. Call the number on the back of your card to make a formal report. Depending on the charges, your credit card company may need to temporarily shut down your account to protect you from any additional charges.

3. Submit a Complaint if Your Credit Card Company or Bank is Negligent

Your credit card company or bank should investigate charges within ten days of your report to dispute fraudulent charges. The Consumer Financial Protection Bureau can help you file a complaint with your credit card company.

You’ll need the following information to begin the complaint process with the Consumer Financial Protection Bureau:

• Dates and charge amounts
• Billing statements
• Records of communication with your bank or credit card company

4. Stay Vigilant Against Scammers

Credit card scams are very common, and most of us are encountered by potential scammers via phone or email regularly. If you’re concerned about callers asking about your account information, verify the call by contacting your bank or creditor before providing information.

Using a virtual credit card may be a good option to help protect yourself from fraud while shopping online, but virtual cards are not the ultimate solution to fraud prevention. Talk to your credit card company about their fraud prevention plan and advice on how you can take additional measures to protect yourself.

How Else Can I Protect Myself from Other Types of Financial Fraud?

Taking steps to protect your identity can help reduce the risk of other types of fraud like identity or credit fraud. Identity hackers can use your information to open new credit card accounts under your identity – potentially jeopardizing your good credit score.

The Consumer Financial Bureau suggests taking these steps toward a more secure financial

1. Check Your Credit Report Often

Monitoring your credit score can help you keep on top of any sudden changes to your credit score, and allow you to view your current credit lines. Hint: if there are any new lines of credit that you don’t recognize, contact the card issuer immediately and consider a credit freeze.

2. Set Up Fraud Alert

You can set up a fraud alert to require a financial institution to confirm your identity before a new credit card account can be opened. This can be helpful to stop fraudsters from opening accounts before they run up a credit card bill that’s not yours.

3. Update Passwords

Consider making updates to your passwords frequently, especially if there has been a data breach that may affect you. For strong passwords, the FTC recommends using complex phrases, while avoiding numbers that are easily obtainable like your birthday or phone number.

 

4. Review Your Credit Card and Bank Statements Carefully

As mentioned before, getting in the habit of checking your statements carefully could help you catch any unauthorized activity on your accounts. Taking early action against any unauthorized credit card use can help you dispute charges with a creditor.

Is a Virtual or Temporary Credit Card Right For Me?

Taking measures toward a safer online commerce experience can add an extra layer of protection for consumers to combat credit card fraud. If you’re a regular online shopper, it may be worth talking to your credit card company about their options for online shopping fraud prevention. Call the number on the back of your card to speak with a representative from your credit card company to ask about virtual and temporary credit cards.

When speaking with your credit card company, ask the following questions to learn how your creditor uses virtual cards to prevent credit card fraud.

• How do I use my virtual credit card?
• What do I do if I need to make a return on a purchase?
• What other steps can I take to prevent credit card fraud online?

The Takeaway: Virtual Credit Cards

Virtual credit cards are just one option to consider to protect yourself when shopping online. Do your own research by talking with your credit card company before committing to a virtual credit card service.

Staying updated on current financial news and known-scams by checking in with government organizations like the Federal Trade Commission can help you be a more knowledgeable and protected consumer.

Use a credit checking service like Turbo to check up on your financial health consistently to help you avoid being affected by credit card fraud – and help you manage your finances. Staying aware of what’s going on with your credit report and accounts is one of the best ways to ensure you’re always in good financial standing.