The credit card fraud is the general term used for theft/fraud committed using a credit card or any other payment methods which are similar to cards. The main purpose for credit card frauds is to obtain unauthorized funds from someone’s account and this type of fraud is adjunct to identity theft. Federal Trade Commission representatives declared that in increased with 28% in 2008 and in 2009 it’s still on an ascendant trend.
The fraud, in the beginning was more like stealing someone’s card or compromising the data associated with the account. The thefts needed the card account number or any other information merchants requested for legitimate transactions. There are many methods to make a credit card fraud and some are very intelligent and subtle, while others use force and power to get the information from the cardholder. The rapid progress of the Internet and the use of credit cards by more and more customers in this online environment lowered database security. In time, millions of accounts have been destroyed by the credit card fraud.
Stolen or lost cards can quickly be reported by cardholders, but thieves work very subtle, and cardholders might not think that their card is missing for fraudulent use, and until a strange position appears on a billing statement and the cardholder begins to be suspicious. When a card is lost or stolen, it usually remains usable until the holder announces the issuer of the lost credit card. There is the possibility for the thieves to make purchases on the card until it becomes canceled. A thief could go shopping for thousands of dollars (services or merchandise), before the cardholder or the issuer realizes that the card is in wrong hands. The common security measure is the signature panel, but the signature is quite easy to imitate; there are some merchants who demand a picture ID (driver license, ID card) to verify if the card holder is the real person who owns the credit card. The card holder can refuse this identification process, and asking for personal proofs usually means that the merchants violate the agreement they made with the issuers. Another security measure against the credit card fraud would be to require the credit card user indentifying information, like the ZIP or the postal code, but there are situations when someone loses his/her wallet and the thief has access to that personal information.
There are some software applications which can predict if the transaction is a fraud or not. A transaction for a large amount of money, occurring at a great distance from the cardholder’s home can be suspicious, and even the merchants have the right to call the card issuer for verification, they also can decline the transaction or hold the card. The customer, if he/she is the real owner of the card, will get it back, and if not, he/she will get in trouble.
The credit card account info is stored in various formats. The number of the account is imprinted or embossed on the card, and the data is stored in machine readable format on the magnetic stripe. The most common fields stored on that stripe are: name of the card holder, account number, expiration date, and verification code.
The credit card fraud
The credit card fraud is the worst bad dream of many people who want to have a clean credit report, and you must know how to action when you want to report a case of credit card fraud. First of all, you should obtain a free credit report online, or by requesting it from a national bureau (you can get a free one from each of the three credit bureaus in U.S.A.). Then you should file a police report with your local police department; this can be done over the phone and also don’t forget to get the hard copy as soon as it is available. A very important step is to freeze your accounts, and maybe you would like to make some transfers in order to save your money. This can be done by calling the credit card issuer, at the phone number on the back of a credit card, in the contract, or on an account balance. The issuer will monitor all the charges and all the financial activity of your credit card account, and until a new credit card will be issued, the other one will be blocked and account transactions also stopped.
Major routes for fraud are Internet and mail, because there are a lot of merchants selling and shipping products using these methods. Most of the times, in the situations when the card is not present physically, the merchant has to rely on the information the card holder offers. Ordering products by telephone is the most risky situation of “card not present” transactions, and card fraud on telephonic orders has a bigger rate than online. Merchants cannot actually verify if the person which claims to be the cardholder has the right to authorize the purchase. Shipping companies often guarantee delivery to a specified location, but they don’t have to check the person at the destination and they aren’t involved in payment processes. One of the measures used by merchants is to allow shipment only to an approved address, and the approval should be given by the cardholder. Smaller transactions don’t seem suspect, but the larger transactions are likely to be investigated by the card issuer or by the merchant in some cases.
A lot of measures have been imposed on retail market, and especially on transactions which are completed by paying with the credit card, but they are effective just for a while, until the “hacking” solution is found also. All customers expect using the credit card without any frauds, and usually this is just idealism, because there are a lot of merchants involved in this kind of hacking networks, and they steal valuable information and money. Implementing most of the security measures sometimes means losing clients, because more than security, customers want rapidity in the acquisition process, they want to make the payments fast, and they don’t like being checked 10 times for buying a bottle of juice and paying with the credit card. In the same time, if a merchant doesn’t implement the security measures, he is more exposed to the credit fraud and he will spend considerable time in order to report the credit card fraud and to solve his problems.
Legislation in this field, related to cards as a payment method is quite new, and there still are a lot of problems, because the legislation cannot cover all the ingenious methods the thieves create for breaking someone’s account and stealing his money and his valuable information related to his financial activity.
Usually, the credit card fraud is strong related to identity theft and it can be divided in two large categories: account takeover and application fraud. When a criminal uses stolen or fake papers to open an account in other’s name he commits application fraud. Thieves usually steal documents like bills and statements from bank to build up information they need about a certain person. They also may create counterfeit documents. In the account takeover fraud, the thieves try to take over someone else’s account, and they do this by gathering information about her/him, and they masquerade in front of the card issuer as the cardholder. They ask for the mail to be sent to a new mail address, and then they ask for a replacement card to be sent. There is a new security procedure used by merchants: in order to protect the consumers and their reputation, they ask the clients to send a photocopy of the physical credit card and the statement, to ensure the legitimate usage of a card. Merchants also have an important in the report of the credit card fraud process, because they can monitor their own payment system, and notice the legal authority if something suspect appears. There are laws on the credit card fraud which regulate this aspect of the financial life of the citizens, but it must be continuously improved because technology is continuously evolving.
When the information is stolen in another legitimate transaction, the fraud is called skimming and it is usually a dirty “inside job” of a dishonest employee of a legitimate merchant. The thief can procure a victim’s credit card by photocopying his/her receipts, or more advanced methods like small devices which swipe and record lots of victims’ credit card numbers. Skimming is very easy to make in restaurants, bars or any other place where the skimmer gets the credit card out of the cardholder’s view. The credit card fraud thieves also use small keypads which transcribe the 3-4 digits Card Security Code which is not recorded on the magnetic strip. Thieves use this method for stealing cardholder’s information because this is the easiest method. They have machines which record the information on the magnetic strip, they write the verification code and this can easily be done because the clients usually hand in their credit cards to the merchants for paying and then they get them back.
The credit card fraud
Another instance where skimming was often reported was when there were used some little devices in the card slot of the ATM, and the information is read by this device. The user unknowingly passes the card through it and they are usually used with pinhole cameras to read users’ PIN in the same time.
Skimming is pretty difficult to detect by the cardholders, but if there is an enough large sample of cardholders who have reported fraudulent transactions, then the merchants they often use are analyzed. If there is a visible relationship between them and the merchants, like if a merchant has a higher percentage of appearances on the list, then he might be investigated for credit card fraud. There are special algorithms which look up patterns of fraud in police’s databases.
Carding is another type of credit fraud, and it refers to the verification process of a stolen card data. The thief usually presents the credit card information on a website which approves in real time the information and if the transaction is approved, than he knows that the card is still good. The items used for this kind of verification are immaterial and the thief doesn’t actually have to purchase a real product just for checking. They try the cards for website subscriptions or donations, and these situations are enough for proving the availability of a credit card. Websites known to be susceptible to carding processes are known as cardable websites. In the past, the credit card fraud could be done only with software applications called “generators” which produced sequences of credit card numbers. After the numbers were generated, they were also tested for validity. This system is not working anymore because nowadays, for online purchases additional information is required (like billing address, expiration date or 3-4 digits verification code). So the only method for nowadays’ thieves is to get all this information, and then use it with illegal purposes. The easiest methods for getting the information from victims are skimming or phishing. The set of credit card details which have been taken this way and also verified is called phish. The carders usually sell these data files to other people who actually carry the fraud. The market price for these phish collections of information ranges from US$1.00 to US$50.00, depending on the type of card information provided and freshness.
Here are some prevention tips which might help you not to be caught by credit card thieves and to become their victim!
Always take care of your credit card and make sure that you get it back from the merchant as soon as possible and don’t let it out of your sight whenever possible. You have to pay attention to whom you give the credit card, and never give the number of the card over the phone, only if you know you are talking to the card issuer or with a reputable company. Never respond to e-mails that request personal information or credit card info, because these are phishing scams. If you navigate to a website which is not secure, don’t provide your credit card information or other personal information. When you receive your credit cards, sign on them, because this is the primary identification element which can provide you security. Don’t keep your PIN codes together with your credit cards, because this is the most often mistake made by cardholders. It might seem very practical, and easy to find a PIN when you need it, but keeping them together is not the greatest idea, because thieves might effortless access your bank account having both the lock and the key. Avoiding the credit card fraud is pretty simple if you follow these tips, and you can save yourself from being credit card thieves’ victim.
Leaving your credit cards or the receipts related to your bank accounts lying around, at home or at the office, because they might give valuable information to people who are looking for this type of occasions. Keep the face of the credit card hidden, and shield the number so that other people around can’t copy it or capture it on a camera. Keep a list or a file on your computer with all the bank account numbers and the dates of expiration, and next to them keep the phone numbers and the address of each bank that has issued you a credit card. This list is a real value for you, keep it well hidden, and don’t forget to update it each time you get a new card.
It is always better only to carry those cards you absolutely need. Keep your receipts so you can compare them with the monthly bills and report as soon as possible any charge you don’t recognize. Call the card issuer and all problems or errors will be solved. A simple rule related to business and finances says never to sign a blank important document. In the “important document” category credit card receipts are also included. Draw lines in the blank portions of the paper, where additional charges could be added. When you change your address, notify as soon as possible the card issuers. If you have any problems related to credit card fraud, you should better notice the card issuer and get yourself a credit card fraud lawyer, which has experience and faced many times the difficult situations you are in and can give you valuable advice.
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