When thieves steal a credit card or a credit card number, there are usually three things they might do with it: they could use the card to buy things, use it to get new cards in your name or sell the card information for cash. Often, a thief or a series of thieves may do all three.
TL;DR (Too Long; Didn't Read)
Credit card fraudsters may use stolen credit card information to buy things, either in store or online, but they may also use the info they steal to open new credit cards in your name, or they may sell the information to other thieves. Some will do all three.
Amateur Thieves vs. Professional Thieves
If an amateur thief steals a credit card from someone's wallet, there's usually not too much that person can do with it. He might make a few purchases in a store or online, but once the victim realizes the card is missing, the card is cancelled and the thief's spending spree is over. An amateur thief has a good chance of getting arrested when he presents a stolen card to a store clerk. Professional thieves can do much more with a credit card by stealing its information, usually online, without the victim ever knowing about it. If you see a website you haven't heard of before, offering deals that are too good to be true, or get an email asking for your credit card information, this may be a thief trying to get your credit card information.
Credit Card Thieves May Buy and Sell Merchandise for Profit
Perhaps the most straightforward way thieves make money from stolen credit cards is to buy things. They can go to a store, or shop for things online using your name. In 2015, a Brooklyn couple was sentenced to prison after making over $1 million in goods, services and cash. A large part of their scheme was using stolen credit cards to buy items like transit passes, gift cards, baby care items, computers and movie tickets. They then sold the purchased goods on the internet using eBay, Craigslist and websites they set up themselves, making a profit because it cost them nothing to buy the goods in the first place.
Credit Card Thieves Might Apply for New Credit Cards
With someone's credit card information and other personal details about that person, thieves can apply for other credit cards in that person's name. Because the theft victim never sees the statements, she may never know about this until she looks at her credit report, or the credit card companies track her down to ask when she will be paying them back. While you can't generally open a new credit card without a Social Security number, a resourceful thief who stole your credit card information by hacking into a computer system has likely also stolen all the accompanying information, including your Social Security number, your address and your driver's license number.
Selling Stolen Credit Card Information
Credit card details are a hot commodity for thieves around the world. They buy and sell them, often in bulk. There may not be much money in selling the details of a single credit card, but when someone hacks a website with thousands of credit cards in its database, there is big money to be made. Once a credit card goes up for sale online, the whole process starts over again, with new thieves creating fraudulent cards, using them to make online purchases or applying for brand new cards in the victim's name.
What to Do if Your Credit Card Information is Hacked or Stolen
If you become the victim of an identity theft or if your credit card information is hacked or stolen, file a police report with as much information as you can, and report the theft to the major credit reporting agencies. They can put a fraud alert on your credit report so if anyone tries to open a card using your information, the issuer will see the fraud alert and deny the transaction.
- United States Department of Justice: Brooklyn Couple Sentenced In Manhattan Federal Court For Massive Internet Identity Theft And Credit Card Fraud Scheme
- CBS Money Watch: What Identity Thieves Do With Stolen Credit Cards
- MarketWatch: 18 Most Popular Things Fraudsters Buy with Your Credit Card
- Scambusters: Credit Card Security Tips - from a Credit Card Thief!
- Experian: 20 Types of Identity Theft and Fraud