According to the Federal Trade Commission, more than three-quarters of a million Americans reported new or existing credit fraud in 2019, making credit fraud the prevailing type of identity theft. The Nilson report shows losses from credit fraud were almost $28 billion in 2018, with the US losing nearly $9.5 million.
Suffering credit fraud is inconvenient. Being convicted of credit fraud results in serious penalties, including $10,000 fines and up to 99 years in prison, depending on the circumstances.
How does Texas define credit fraud, and what happens if you are accused?
Defining Credit Fraud
An individual commits credit fraud by using another person’s information and credit standing to borrow money, open accounts, and purchase goods or services without intending to pay it back.
A person can use personal information gleaned from various places to open loans or credit card accounts and obtain cash advances. They may also exploit existing accounts to make purchases without the victim’s knowledge through illegal access to bank accounts and credit cards.
Victims end up with unpaid debt in their name. They can usually sort everything out, but it takes time and effort. Their credit scores dive, although temporarily, and they have trouble getting new credit. Lenders charge higher fees and interest rates, not just for those with less-than-stellar credit scores but also to pay for fraud prevention and management programs.
The law defines 20 distinct forms or types of credit fraud by determining the kind of personal information used, the method the perpetrator used to steal the data, and the type of credit obtained through fraud.
The offender obtains personal information by stealing credit cards, account numbers, usernames and passwords, Social Security numbers, and other private data. They get the information through:
- Phishing scams via email, phone, or social media
- Card skimming
- Copying information by looking over a victim’s shoulder
- Stealing driver’s licenses, credit cards, or mail
- Buying lists of information leaked through data breaches
Using this information, the individual opens new loans or credit cards in the victim’s name. Alternatively, they may take control of existing accounts by changing the mailing address or account passwords. Sometimes, they open accounts under the name of a minor child.
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Types of Credit Fraud
Credit fraud is split into application fraud and account takeover.
Application fraud is also known as identity theft and involves stealing personal data to open an account and withdraw cash. Account takeovers occur when someone hijacks an existing account to get replacement cards in the victim’s name and manipulate the account information.
For victims, there is a difference in protection between credit cards and debit cards.
The Penalties for Credit Fraud
Most states, including Texas, have severe criminal penalties for credit fraud. The minimum penalties in Texas include a jail sentence from three months to two years and fines of up to $10,000.
If the crime is against an elderly individual, the prison term can go up to ten years. Using fraudulent credit to purchase more than 50 items can get you a felony conviction worth five to 99 years.
Courts base the penalties on the defendant’s history of previous felonies, use of weapons during the crime, and bodily injury to another. The punishment includes imprisonment, fines, and restitution if the perpetrator uses a financial transaction device to steal personal information.
Possessing and selling stolen cards, account numbers, PINs, credit card numbers, or bank accounts or fraudulently falsifying your identity to obtain money and goods is a serious crime. A felony conviction can follow you for life, impacting everything from your ability to find work and housing to borrowing money.
Have you been charged with credit card fraud? Attorney Brett Podolsky can help »
Why You Need an Attorney
If you have been accused or charged with credit fraud, you need an experienced fraud attorney who can closely examine the evidence and possibly get the charges reduced or dismissed. First-time offenders receive a fast education on the seriousness of credit fraud. Contact the Law Office of Brett Podolsky today for a free case consultation.