Credit Cards are a convenient payment method, but this conveniences brings about some risks. Fraud with the use of stolen credit cards is committed for the purpose of obtaining goods without paying, to obtain unauthorized funds from a bank account or to sell stolen information further.
What Is Credit Card Fraud?
Credit card fraud costs cardholders and issuers hundreds of millions of dollars each year. While physical theft is the most obvious form of credit card fraud, it is not the only way fraud occurs. A more subtle form of fraud is misappropriation.This is where someone uses your credit card details rather than the physical card to make purchases, without your consent to do so. After all, it is extremely simple to enter a credit card number in an online store and make a purchase without the need to have access to the card itself. Misappropriation can take many forms, some of these might be as follows:
There are many ways in which fraudulent credit card information can be gathered, this might include any of the following common ways:
To put it in simple terms credit card fraud can be any instance in which someone uses your credit card without your explicit permission to do so. Those committing credit card theft gain access to your card number, PIN code or other information in order to make purchases that have not been authorised by yourself. This can be done either with or without the actual credit card since purchases can be made online using just the details. Using a two factor authentication in this case can prevent many such fraud attempts.
With the relatively new contactless payment, if a fraudster has hold of the credit card, they can make purchases without the need to do anything other than present the card. However the amount that can be deducted without contact is usually limited. If the total payment exceeds this limit, entering a PIN number will be necessary.
There are ways in which you can effectively protect yourself against credit card fraud, and in this article, we are going to look at how to do this in detail. We will also look at the various different forms that credit card fraud can take so that you can be well armed against it.
How To Detect If Your Credit Card Has Been Stolen
If your credit card has physically gone missing, it is a sign that it may have been stolen. Of course you may have simply misplaced it but until you are absolutely certain of its whereabouts, it is a wise idea to freeze or cancel the card and report to your card company’s fraud department so that they can monitor any recent activity.
However, since many forms of credit card fraud take place without the physical card being used, you might not even notice that any crime has been committed until you receive your high statement. But there are ways in which you can detect whether or not your credit card has been stolen:
Signs of a Stolen Credit Card Being Used
It is not just card holders who can detect if a card has been stolen, but merchants and companies should remain alert to signs that a stolen credit card is being used within their business. There are certain signs which can be observed that may help professionals to catch credit card theft in action. Whilst these behaviours may not provide solid proof that credit card fraud is taking place, they can certainly be a good indicator. Credit card fraud can eat into the profits of a business and some of the following may point towards it. Some of these behaviours may look like some of the following:
Most Common Credit Card Fraud Types and Examples
As we mentioned earlier on, there is more than one type of credit card fraud, and it is important to be aware of the different forms it can take in order to be better prepared to take action should it happen to you. There are many different types of credit card fraud, but there are some which are more common than others. We are now going to take a look at these various forms of credit card fraud in a bit more detail.
Account Take Over
When a person who is committing fraud discovers your personal details, this is the pinnacle of their work, the icing on their cake and the pot of gold at the end of the rainbow. These details are all the thief really needs in order to commit fraud against you, they certainly do not need your physical credit card.
The thief can contact your credit card company using your personal details and request a new card by reporting it stolen, they can even change your address so that the new card arrives at their address rather than your own. Some thieves may even simply request a second card all whilst pretending to be you. This way, you will not be aware that your card has been cancelled and a new one sent out. Once the thief has completed this phone call, they will then receive any correspondence related to your card, this includes statements, bills and other mail from the credit card company, leaving you completely in the dark. Therefore, if you cease to receive paperwork related to your credit card account, it is essential that you contact the company and have them take a look at your account. You might even request information on what the current address linked to the account is.
Another common way of account take over is by the theft of the actual credit card before it reaches you. This could be from someone handling the envelope containing the card, whether that is someone from the credit card company itself or someone working to deliver your mail, the sealed card will need to pass through many hands before it gets to you. The card may even be taken directly from your mail box by an opportunist thief. If you have requested a credit card to be sent out to you, it is worth asking the company how long delivery usually takes and if the card has not arrived within this time frame, contact them immediately to let them know.
Counterfeit Credit Card
A counterfeit is something which has been altered, copied or duplicated and can apply to a whole host of different things but in this case applies to the credit card. These counterfeit credit cards will appear just like any legitimate credit card but will be a copy of the original. Thieves achieve this by using high end technology to laminate and emboss the credit cards to look just like a regular card. They will even include a legitimate looking hologram and magnetic strip to make the credit card indistinguishable from the original.
The counterfeit credit card can then be used to make purchases and complete transactions in exactly the same way that any other card can be used, making it difficult to notice any wrong doing.
Credit Card Skimming
The electronic reader for cards or skimmer is used to make purchases within stores and businesses and is perfectly legitimate and usual. however when in the hands of someone who is out for their own gain, this can be extremely dangerous for you and profitable for them.
Skimming is done by attaching a small electronic device to the reader in the ATM or card machine. This device reads any information from cards used in that particular ATM or card machine and stores it electronically. There is also the portable method, which is a separate device that a credit can can be swiped through when the owner is not paying attention. This is often done by store clerks who are taking part in credit card fraud.
Once the information has been gathered, criminals can then use the details to make unauthorised purchases. This type of credit card theft usually takes place in locations such as restaurants where your card is temporarily taken out of your sight whilst making payment.
RFID skimming will happen the same way as regular skimming, the difference is just that the information on a RFID enabled credit card can be transmited without a contact. The attacker will use a strong directional antenna that could potentially read RFID enabled credit cards. These RFID credit cards however are protected with an encryption, so even if an attacker receives information from the credit card, it will be encrypted. Encryption may be hard to bypass, thus committing an RFID crime succesfully might seem easier said than done.
Card Not Present Fraud
Obtaining credit card and personal information for unauthorized usage of such information for fraudulent activities over the internet, phone or mail.
Credit cards for whose expiration dates, number and name are known to the thief, they can be used online without the need for the credit card in their hands. This occurs because the expiration date, name and credit card number are all on the front side of the credit card. And sometimes the scamming aspirants may only get a hold of information on this frontal side. They will either memorize this information or use a camera to make a picture.
If a verification code from the back of the card is required, thieves will often make smaller purchases whilst trying to guess the code. After all with a 3 digit number there are only 999 possible combinations.
Application Fraud
In much the same way that identity theft occurs, fraudsters can assume your identity and apply for a credit card in your name. The debt that they subsequently rack up will then be stacked against you and your credit rating. There are many safety measures in place within the banking industry and so it is becoming increasingly difficult for criminals to commit this type of fraud but it does still happen and you should be aware of it.
In order to apply for credit cards, companies will often require certain documents to verify your identity and a thief will have no qualms in stealing or creating false documents in order to qualify for application.
Credit Card Fraud Protection Tips
It may seem absolutely frightful to think how easily your credit card or credit card details might be stolen. But fortunately, there are ways in which you can protect yourself from falling victim to this crime. By being vigilant and following some simple guidelines, you can successfully minimise your chances of being targeted by credit card theft.
TIP: You could for example save your PIN and masquerade it as a shopping list.
6x eggs, 2x bread, 1x milk, 4x apple. That would mean your PIN number is 6214.
Or instead of numbers you can use letters that correspond to the position of the letter in the alphabet. For example the word DAN would mean D (4th letter), A (1st letter), N (14th letter). Your PIN in this case is 4114. You would then save this word DAN somewhere instead of your PIN.
Better yet is to use your own personal system and use the above two examples as a guideline.
Features on a Credit Card
As well as following the above safety tips, it is worth knowing the format and features of a genuine credit card so that you can be on the lookout for any counterfeits, especially if you work in an environment where you frequently see cards or take payments yourself. Below you will see the features of a credit card followed by some ways to determine whether the card is real or a copy.
In order to determine whether a credit card is legitimate, there are things you can look for on the card itself. Check out the following hints:
How to Report Credit Card Theft
If you are unfortunate enough to become a victim of credit card theft, it is important that you act quickly in order to reduce the very real risk of having to foot the bill yourself. As soon as you notice any suspicious activity on your credit card account, you should take the following steps:
Conclusion
Sadly, credit card theft is a frequent crime which we see being committed. However, there are ways to protect yourself from becoming the next victim of this type of fraud. By making yourself aware of the various forms of credit card fraud, you will be better equipped to notice if these things begin to happen to you.
It is important to take steps to ensure that your credit card details are as difficult to come by as possible, as this will act as a deterrent to thieves, after all they want their job to be easy so it is up to you to make it hard. If you do see anything on your credit card account that you do not recognise or you lose your card, you should report this to your credit card provider straight away.