What is Credit Card fraud? Credit card fraud is a term that refers to fraud or theft of someone else’s credit card as use for payment for goods or receiving funds in cash. Thousands of people are victims of credit card fraud each year, and these fraudulent charges cost millions of dollars. Some cardholders do not know that they are victims of credit card fraud until massive damage has already been done to their credit. It can take years for some people to recover from the damage that comes with being a victim of credit card fraud. Cardholders can take measures to protect their credit cards from fraud by understanding the types of credit card fraud.
List of Different Types of Credit Card Fraud
Stolen Credit Card Fraud
This type of credit card fraud happens when someone steals the credit card of another person and uses the credit card as if it were their own. Criminals use the card in stores. When merchants do not ask for picture identification for these cards, identity theft can take place. Card not present transactions can happen with a lost or stolen credit card as well. Criminals can purchase items over the Internet using the credit card number and the security code of the real cardholder.
Credit Card Application Fraud
This type of fraud happens when a criminal tries to open a credit card in someone else’s name. Criminals can either steal documents—such as bank statements, utility bills, and pre-approved credit card applications—to create a file of personal information to use. It is also common that criminals create fake documents in someone else’s name for their own use.
Credit Card Account Takeover
Criminals use account takeover as a way of fraudulently taking over someone else’s account. The criminal gathers personal information on the cardholder, contacts the credit card company as if they were the original cardholder, reports the credit card stolen or lost, and redirecting the mail to their address. The criminal receives the new card, actives the card, and begins destroying the cardholder’s credit.
Credit Card Skimming
This form of fraud takes place during legitimate transactions. A dishonest employee takes the cardholder’s information by using a skimmer (a small electronic device) or photocopying receipts and uses it later for personal use. This can happen during Internet transaction or in restaurants or other businesses that take the card out of the cardholder’s immediate view.
Credit Card Carding
Carding is a process used to test the validity of stolen credit card information. The criminal uses a website with real-time transaction to determine if the card is valid. Criminals use cardable websites to make these transactions. The criminals make small transactions so that cardholders are not suspicious. Criminals later sell the credit card information to other criminals.
Credit Card Phishing
This happens when criminals send a massive amount of fake e-mails to consumers to obtain personal information from consumers. The criminals pretend to be bank personnel. When the consumers respond, they are directed to a fake website to enter personal information, including credit card numbers.
Criminals are constantly finding new ways to commit credit card fraud against unsuspecting cardholders. It is important that cardholders protect their cards against fraud by not letting the credit card out of their sight. Someone is watching even if the cardholder does not realize.