Types Of Credit Card Frauds

Credit card fraud broadly implies theft and fraud that are committed using a card or any similar payment mechanism. It can simply be defined as "an act of making a purchase using someone else's credit card information." The purpose of the fraud can be to obtain goods without paying for them or to obtain unauthorized funds from an account. Non-Receipt Card Fraud: This type of fraud occurs when a new or a replacement of the original card is sent by the bank through mail and it never reaches the actual recipient.

Some of the banks have tackled this problem by setting up a system of sending inactive cards and the respective client has to call back to activate his/her card. But still there are some banks that have not adopted this procedure and send the activated card to their clients. Personal Card Frauds: This happens when the card user makes purchases and then later claiming that someone else had done it.

This results in the owner not paying from his/her pocket as the card is already reported stolen. Non-Receipt of Goods Purchased: This is one of the many types of credit card frauds that occur when the owner buys some good & services through the card. When he/she receives the statement for same, they call the company and claim denial of ever having received the items. The owner may also claim that he/she never authorized the transaction.

Credit Card Fraud by Employees: This usually happens when the employee is designated as a signatory on the business cards. At times like these, the employee can make personal purchases and have the company pay for it by using the company card. Stolen Credit Card Frauds: This is the common type of fraud that occurs when one person steals another person's card and uses it to make his/her own purchases in the owner's name.

This type of fraud can be done on online transactions too. Forged Credit Card Fraud: Such a fraud can occur when someone creates a fake card with fake numbers and a fake name and then using it for transactions. As this card is not linked to any real account, the credit card company is not liable to pay for the transactions as there is no info about the user. Skimming: This type of fraud occurs when there is a theft of card information wherein a merchant or an employee makes a second copy of the owner's card details.

Then this copy is sold out to such people who are involved in forgery and make multiple and fake copies of the card. Thus there are many types of frauds that can take place related to card. There are also penalties for the same and can include monetary punishment as well as imprisonment depending on the gravity of the offence.

Requiring a PIN clearly adds a layer of identification and protection that can deter such fraud. How do we know that this effort to increase security at the point of sale is going to actually drive online fraud, We already saw it happen in Europe. In 2002, European financial institutions starting rolling out these very same cards and point-of-sale terminals.

We call this technology EMV (Europay, MasterCard and Visa). Financial institutions intend to make EMV a global standard for authenticating credit and debit card transactions using integrated chip technology. This technology has now been partially or fully deployed in about 14 countries and regions, including most Asian Pacific nations, all of Europe, most of Latin America and the Caribbean. Every country and region in which EMV has been deployed has seen a corresponding surge in online fraud. Four years after beginning the deployment of cards and new point-of-sale terminals, about 99 percent of businesses and consumers were utilizing EMV.

No doubt the cards were effective at cutting offline abuse. Before EMV, Europe saw fraud losses in stores of about 13 basis points of net sales. However, the online world was a fraud nightmare. Online credit and debit card fraud rates more than doubled from the pre-EMV days. In 2004, Europe had an online credit and debit card fraud rate of 25 percent.

By 2010, the rate had soared to 64 percent. Related: Better Late Than Never, Target Accelerating Program to Detect Credit-Card Fraud. Making credit and debit cards smarter made the crooks smarter. They stopped using cards with EMV technology in brick-and-mortar stores. Even the thieves knew that using one of the new EMV cards in a store was quickly going to get the card shut down. So they doubled their efforts at stealing online, where the chips in cards did no good when all that was required were card numbers.

Additionally, the bad guys shifted more of their nefarious online activity to foreign countries where it’s even harder to tell a legitimate card user from a thief. When EMV technology was established, the crooks also started targeting debit cards over credit. Most debit cards use the magnetic stripe and therefore behave like credit cards without the chip and pin, making it easier for fraudsters to exploit both offline using the swipe and online using the debit card number. Some will probably ask why online retailers don’t just require a PIN for all purchases as in-store clerks do with EMV.

We may see more of that kind of adoption here in the U.S. ’ve seen in other countries that saw this surge in online fraud, even as offline fraud declined. However, putting any barrier to check out in the ecommerce world means a lot of full shopping carts that never make it to purchase. We’re all just going to have to be a lot more vigilant about how and when our cards are used. My financial institution now emails me every time one of my cards is charged. But something tells me I’m going to be sitting in my living room in California when I get an email notifying me I just bought a couch in Russia. Let’s just hope I’m no Nostradamus.

If you are one of those who do not check their credit report frequently, then you may be in for a nasty surprise. Most credit frauds and scams take place when you are not keeping a track of your report. In fact, if you do not check it immediately and if you spend more time not noticing the fraud, things could only get worse. An annual credit report is free and every person should go through it.

It is given to the consumers so that they can go through and check whether the information is correct and also dispute any wrong or incorrect information. This is the only way to prevent fraudulent activities from coming on to your account. If, unfortunately, you have been the victim of a credit fraud, then you have something called the victim statement.

It is used to notify your creditors that you have been prey to a scam and that is why the information is showing up on your credit report. There would be a 90 day security alert period on the report which will allow you to further investigate the scam. You should also immediately contact the creditors and debtors and inform them about the scam. In case the scammer is still using your account, the creditors and lenders would know what action to take.