Generally, it’s safe to use your credit to pay for something over the phone. All credit card transactions carry a certain amount of risk, and paying over the phone is no different.
Paying over the phone has a similar level of risk as paying for a meal at a restaurant. When the bill comes, you hand off your card to the waiter. They take it to the back to ring up your order. When processing your payment, they could easily steal your card information for later use, just like someone on the other end of a phone call.
Thanks to digital wallets and other advancements in personal finance technology, many people aren’t used to paying for something over the phone. You likely only do so when ordering takeout or patronizing a small business. It may feel dangerous simply because you don’t do it very often.
Even if that is the case, there are some risks unique to sharing your credit card information on the phone that you should know about if you want to keep your card safe.
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Risks of Giving Credit Card Information Over the Phone
When paying someone on the phone, it’s difficult to verify that you’re purchasing the correct product from the correct merchant. Unlike in-person and online transactions, you can’t see the vendor or the product before making your purchase.
Uncertainty and risk go two ways. When they can only hear your voice, merchants don’t know if you have permission to use the card you’re paying with. To confirm your identity, you’ll probably be asked to provide a great deal of personal information, including:
- The card issuer;
- The credit card number;
- The card’s expiration date;
- The card verification value (CVV) or security code;
- The full name on the card;
- The billing zip code or address.
Once you share that information with someone, you can’t take it back. If you give it to the wrong person, the consequences can range from fraudulent purchases to identity theft to long-term credit damage.
Unfortunately, this makes giving out your credit card number over the phone a fairly insecure way of paying for goods and services. You would probably be better off paying with your card online, but that isn’t always an option.
Credit Card Security Standards and Legal Protections
There are both industry protections and federal laws in place that are designed to safeguard consumers’ private information when paying with a credit card.
Industry Security Standards
The credit card industry — led by Visa, MasterCard, Discover, and American Express — enforces a security standard on retailers for collecting credit card information. Known as the Payment Card Industry Data Security Standard (PCI DSS), it is overseen by the PCI Security Standards Council, an independent organization.
There is a document explaining how retailers and call centers can comply with the PCI DSS with over-the-phone transactions. Non-compliance can result in fines or loss of use of a lender’s card.
According to the PCI DSS, retailers can only save some of your information. Storage is not permitted for the full magnetic stripe data (given smart chip technology and the fact that the retailer won’t have access, this is a bit superfluous), the security code, and PIN.
They can store the cardholder name, service code, and expiration date, and the primary account number — the actual credit card number — but must render it unreadable if stored.
Legal Protections
The Fair Credit Billing Act (FBCA) was created to protect consumers from unfair billing practices. Under the FCBA, cardholders are only liable for a maximum of $50 in fraudulent charges. As long as you report it in time, you won’t have to pay more than $50 if your card information is stolen.
Many credit card issuers now offer zero-liability policies. In the case of fraudulent charges, you may not have to pay anything. Typically, you have to report the fraud quickly for the charges to be eligible, though the exact terms of these policies differ between issuers.
Tips to Protect Yourself When Paying Over the Phone
You may take comfort in the fact that your credit is protected even if your information is compromised, but it’s always best to prevent fraud from happening in the first place.
Here are a few things you can do to reduce the risk of fraud from paying by credit card over the phone:
Beware Common Scams
Credit card scams come in many forms, and if you don’t know what to look for, it’s all too easy to fall for one. Learn about common scams, such as the Nigerian Prince scheme, fraudulent IRS calls, and imposter scams.
Be sure to stay up-to-date on new scams, as fraudsters and swindlers are continually getting more creative. The Federal Trade Commission maintains a Scam Alerts page where you can find information on the most recent scams.
Who Called?
Never give out your credit card number if you did not initiate the call. Phone numbers can be spoofed, meaning that caller ID shows a different number than whoever is actually calling you. The person calling you could pose as someone from a retailer, and make it seem legitimate when they are merely trying to steal your credit card number.
There is still some risk of fraud even if you call a real business, but significantly less so than if someone calls you asking for money or private information.
Go Somewhere Private
You should always be somewhere private, where you can be alone, before sharing your credit card information over the phone. If you disclose your information in a public setting, a nearby thief could eavesdrop on your conversation and steal it.
Use Your Credit Card
When paying over the phone, you should always use your credit card instead of your debit card. Credit cards offer an extra layer of protection and security. If someone steals your credit card number, they’re stealing from the credit card company, not you.
If someone gets your debit card number, they can pull funds directly from your bank account. Generally, your money is safe in the bank, but in the worst-case scenario, you won’t see a dime of those stolen funds again.
Double-Check Your Order
During the call, make sure you understand exactly what you are ordering. Ask the person you’re speaking with to confirm what you’ve asked for and how much they plan to charge you for it. This should include any additional fees and service charges. If possible, ask for an order or confirmation number you can refer back to.
Look at Your Credit Card Statement
Once you are off the phone, go online and check your credit card statement to see exactly what is processing. There should be a pending transaction on your account. That charge should match the amount you were told you’d be charged on the phone. It should also come from the name of the business you patronized, not someone else.
Monitor Your Account
In the days and weeks after you have made the purchase, keep an eye on your account. Track the purchases you know you’ve made, and look out for any suspicious activity. Don’t hesitate to report a potentially fraudulent charge if something seems off.
Use Fraud Prevention Tools
Many credit card companies offer a variety of fraud prevention tools, like automatic account locking and virtual credit cards, that can help keep your account safe. Take advantage of these tools to safeguard your finances, avoid scammers, and make it easier to address fraud if it does occur.
Ultimately, paying over the phone isn’t as safe as paying online or in person, where you can stay in control of your credit card throughout the entire transaction. However, it isn’t as risky as it sounds, especially if you take precautions to make phone transactions as safe as possible.
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