Understanding Credit Card Fraud

Today, credit cards are synonymous with spending. They are used every day. They are used by almost everyone who understands their importance. To put it in perspective, credit cards accounted for 35% of all transactions among credit/debit card owners in a 2014 survey by TSYS. The increasing use of credit cards shows; for instance, the national average credit card debt total amounts to $953 billion.

With all that in mind, it is no wonder that credit card fraud was up 46% throughout the world in 2014 with over a billion data records breached. Most cases of credit card fraud affect U.S. consumers, accounting for nearly half of all cases of credit card fraud in 2015.

Long story short, credit card fraud is rampant in the world, especially in the United States. For many U.S. consumers, the chances of avoiding credit card fraud are against them. Despite this, many people don’t really understand how credit card fraud occurs or when they are most vulnerable. There are various different ways a consumer can fall victim to a fraudster.

Different Forms of Credit Card Fraud

Credit card fraud can happen in many different ways. All are bad. Here are some of the most common forms of credit card fraud.

One of the simplest forms of credit card fraud is having a card lost or stolen. It’s pretty simple. Someone finds your credit card. They start spending with the card in your name. Oftentimes, the fraudster will take your card online and go to town.

Online spending is the perfect avenue for the thief to spend since there are fewer safeguards compared to in-store purchases.

A common way to be victimized by fraud is an account takeover. If a thief finds your personal information as well as credit card information, they can have a new, legitimate card sent to them from your card provider. They will usually get the card address changed to their preferences. Afterwards, they can spend however they wish.

Card ID theft is tough form of credit fraud. It works similar to losing your credit card. If a fraudster happens across your card credentials and information, they can use that info to set up a new account or take over the old account. This is tough to track, and it is tough to catch.

Counterfeit card fraud is a popular form of fraud, or in other words, many people know about it after the recent push for EMV cards. Fraudsters skim your credit card information during a transaction. Afterwards, they can create a counterfeit credit card with a fully functioning magnetic strip. Once they get to that point, they can spend as they wish.

Card Not Present (CNP) fraud is a common way to get scammed. Some thieves find creative ways to obtain the expiration date, account number, and CSV of a credit card, normally through a convincing phone call. With the information, they can spend online without actually having the card.

Similar to physical card theft, some thieves can intercept credit cards in the mail. In this scenario, you would have most likely applied for a new card in the mail. After the interception, the card can be registered, activated, and utilized.

Application fraud happens when a fraudster is able to find documents that make it possible to apply for a new credit card in your name. While banks and credit unions are pretty good at countering this form of fraud, it can still be done. The end result is a new credit card in your name in someone else’s hands.

Final Thoughts

For U.S. consumers today, the chances of falling victim to credit card fraud are good. Just by looking at the various different ways it can happen, it is easy to see that fraudsters are creative in their efforts. Today, you don’t even have to lose or have your card stolen to be affected. Luckily, this fact has not gone unnoticed.

On both sides of the ball, innovations are being made by banks and criminals to fight the battle over credit card fraud. EMV security is one of the newest safeguards from the banks and credit unions; for now, in-store purchases are covered by this new layer of security.

While this is good news, the only realistic expectation is for this new security to be compromised eventually. Credit card fraud may never die, especially with the internet today. The only real solution is to be proactive in countering fraudulent efforts and relying on necessity as the mother of invention.

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