Credit card fraud can happen in various forms. The prime reasons for credit card fraud may also be different. Some of them are planned to steal funds from accounts, while some of them are functioned to buy goods without paying the money.
Furthermore, it is important for you to realize that credit card fraud is related closely to identity theft.
As per the FTC (Federal Trade Commission), the population over the age of 16 is the prime victim of identity theft and credit card frauds cases. The numbers are great; nearly 5% of them are currently affected by credit card fraud.
So, It is important to remember that hackers and identity thieves are becoming more tactical while doing this kind of criminal activity. So, you should be aware of the different types of credit card frauds that affect people’s financial data online.
Below are the most common credit card frauds that you can experience these days.
- Application fraud
Application fraud is another part of the identity theft. It happens when a fake person applies for a new credit card by someone else’s name.
The scammers will steal your personal documents, and use them to support their application.
Fraudsters often call people as telephone employers to confirm their identity. If anyhow the customer reveals his/her personal details, those fraudsters forge documents and provide false telephone numbers to authenticate the card.
Presently, banks have taken numerous safety measures to stop this type of fraud from happening.
Documents are checked through various processes and only original documentation are taken into consideration.
- Fake cards
It takes quite a bit of effort and time to make fake cards, but once it is done, it can steal a good amount from you.
A credit card contains the magnetic strip, the electronic chip, and holograms. It is difficult to make a fake card, but a skilled conman can forge this type of cards easily if somehow he/she can manage to get the original names and numbers.
Fake cards can be made using fake names and numbers, too. The fake card isn’t actually linked to an account; so, the credit card company will not take the liability to settle the payments for the transactions since they cannot link it to a genuine customer. By that time, the fraudster will be out of your reach with the purchases.
- Electronic or manual credit card imprints
Another advanced form of credit card fraud is making credit card imprints.
This technology helps somebody to fetch information stored on the magnetic strip of your credit card.
By using your card information, criminals may encode a fake card to perform fraudulent transactions.
- Counterfeit card fraud
Counterfeit card fraud is normally done through skimming. The criminal might get hold of a fake magnetic swipe card containing all of your actual card details.
This fake card then might be used in the place of a fully working card, as it is an exact copy of your original card.
So, the fraudsters may swipe the fake card on any machine and spend on certain goods. This type of fraud can also be performed by a person who knows your card details like the PIN, EXPIRY DATE, CVV, etc. These information can be used to create a ‘fake plastic credit card’.
- CNP (Card Not Present) fraud
Practically, CNP means that a criminal is using your credit card without actually being there physically. If any person knows the EXPIRY DATE and CREDIT CARD ACCOUNT NUMBER, they can commit a CNP fraud against you. This fraud can be performed through phone, mail, or through the internet.
This scenario happens most of the time when we shop online.
To safeguard this situation, the merchants will need the card verification code, known as OTP (One Time Password).
Because of this security check, making CNP fraud is getting difficult for criminals these days.
But, if a fraudster somehow grabs your phone or can get your Email id access or account number, he/she might know that OTP too. So, keep your cards safe as well as your phone and Email, too.
- Assumed identity
In this situation, a fraudster may use a temporary address and a fake identity to apply for a credit card.
For getting a solid protection against this type of fraud, there are several system checks in the banks.
For example, banks may ask new customers to submit account references. The more reference you can submit, the more the banks will be convinced and it’ll become easier to get your card being a genuine customer.
Customers can be asked to provide birth certificates, original copies of driver’s license, or passports, and so on to prove their authenticity.
- Account takeover by someone else
Account takeover is practically the most common example of a credit card fraud. Basically, a criminal will somehow manage to get his hands on your card information and related documents.
This is mostly an online scam.
The fraudster contacts the credit card company as “you” and asks for address modification. They also submit ‘proof’ of identity that they hacked from you. After verification, a replacement card will be issued to that the new address and the conman will be able to use your card.
Unfortunately, it isn’t rare for this type of fraud to occur. So, protecting your personal information will be the best thing you need to do for preventing such frauds.
This means using strong passwords, periodic password changes, using two-step-verification, and not leaving your personal details in the open sight.
Examples of credit card fraud:
There are few examples of credit card frauds that are famous in the credit industry.
“...Albert Gonzalez was a capable computer hacker who had previously been involved in credit card fraud cases, though nothing akin to what made him most infamous. Gonzalez and the group of hackers he led successfully hacked TJX Companies, stealing 45.6 million credit and debit card numbers over 18 months. He and his team went around from store to store, using wireless networks to steal credit card information from a number of different stores, including T.J. Maxx, Barnes & Noble, and Sports Authority.”
“Another recent incident exemplifying credit card fraud cases involved Julio Lopez and Anett Villar, two members of a southern Florida gang that purchased stolen credit card numbers through the Internet and used them to cause over $75 in damages. The credit card numbers were paid for through the E-Gold online payment system, giving fraud investigations a way to track the perpetrators.”
“After purchasing the numbers, Lopez and his gang then made physical cards using the stolen numbers. He then proceeded to sell those physical cards, which were fully functioning credit cards with all the necessary security features. The Secret Service arrested Lopez, Villar, and four others, charging them with numerous fraud cases...”
For more details visit here.
You can also check out a few statistics to get a clearer picture of how much credit card frauds affected us till now:
Data courtesy - creditcards.com