Credit Card Fraud – Types of; and an Avoidance Plan

types of credit card fraud

Introduction

We are living in dangerous times. In payment technology, not only has the ease of carrying out a transaction improved but so has the avenues which can be employed to cause harm. Credit card fraud is quite simply the unauthorized and illegal use of your credit card to make purchases or withdraw funds illegally from your account. It falls under the broader category of identity theft. This is because your personal information is used by the perpetrator to apply for loans or seek other lines of credit. Just yesterday we read about the Philippines government passing a bill on Credit Card Fraud. Steps were also taken by Government of India with regards to credit card fraud in middle of last year.

Through this article we look more into theft that can not only rupture your financial freedom but can affect your credit history, as well. Credit Card companies are doing their bit in this regard – MasterCard will be introducing biometric finger print scanner as a security tool to counter fraud. At our end, we need to read, understand and embrace practices to avoid or report credit card fraud.

Not just credit card, a digital lending platform like Loan Singh*also needs to be secure enough while providing personal loan online. Today however we focus on credit card fraud.

 

Credit Card Fraud

Fraudulent use of your credit card includes misuse of your card number, card details and personal information. This information is used to perform unauthorized transactions from your credit card account. The motive of credit card fraudsters is to illegally acquire funds or products for themselves.  Credit card fraud will initiate either from the theft of your plastic card or upon compromising the details of your credit card account. Either you or the merchants can be responsible for this.

You perform transactions online on web portals callously entering your card details on checkout. You swipe your card at POS terminals at mega store. You even make use of credit cards for recharging your PlayStation account. You are actually leaving crumbs at different digital media which can act as a perfect place for fraudsters and hackers to initiate fraud.

If you detect fraud, you can report it ASAP and get the card cancelled. But, sometimes a compromised account could be hoarded for days or weeks. Sometimes you may get to know about the fraud upon receiving your bank statement which could prove too late. You can mitigate the risk of fraud by regularly keeping a check on your credit card account and report any suspicious transactions or activities. Let us now look at the various ways by which credit card fraud can occur.

 

Types of Credit Card Fraud

The below mentioned 11 Credit Card fraud methods are the prominent ones. There are many more ways by which Credit Card fraud can occur.

  • Credit card being stolen – It could happen either after being misplaced at any store’s checkout or could simply slip out of your pocket to be retrieved by a fraudster.
  • Discarded billing statements – Millennials can hardly keep hold of things. You need everything to be convenient, online, and quick. You might have your billing statements on Gmail. But you should be careful about where you dispose your physical credit card statements. Sometimes sensitive information can be used from discarded bills that could be directed towards credit card fraud.
  • Bank website gets hacked – All of your personal and financial information is stored on the servers of banks or credit card companies. In case of a security breach, this information can fall in to the hands of a hacker.
  • Phishing – It is a tactic used by hackers to send you phony emails claiming to be a business or institution. These emails are made to look authentic, complete with bank logo, letter head etc. They will ask you for your credit card information like passwords and account numbers hoping that you provide it voluntarily.
  • Skimming – It is a technique where a device is placed near a credit card swiping machine. The device reads the magnetic strip on your credit card and duplicates the mentioned card details.
  • Telemarketing scammers – Fraudsters could inform you of a fictitious “Free Trip to Neverland!” or may pretend as your bank officials to get your card details on pretext of cross checking your credit card information.
  • Unauthorized purchase – An unauthorized purchase on your credit card
  • Counterfeit card – This is a duplicate fake card that has real account information stolen from victims like you. The card looks legit, with company logo and encoded magnetic strips. Once the fraud is committed, the cards are abandoned before the misuse is reported by the actual owner.
  • Identity theft – It is the fraudulent use of your personal information. The thieves can harm your image or credit report by placing huge amount of transactions on your account.
  • RFID scanners – Radio Frequency Identity scanners are used to pick your card information when in close range
  • NFC – Near field communication is the technology that powers Apple Pay & Google Pay. If the NFC reader is compromised or tampered with, you can bid your personal information bye-bye.

 

How to Avoid Credit Card fraud?

Being vigilant is the easiest way to avoid Credit Card fraud. But you can off course do more.

  • Change your username and password regularly
  • Choose a password which is difficult to guess. It should be alphanumeric.
  • Do not click on suspicious links or portals that look like your banks
  • While doing online shopping, use a secured (https) website or portal
  • Do not share images of your credit card over any online medium like Whatsapp or Facebook
  • While closing a credit card, ensure it is shred in the presence of your bank officials.
  • Keep copies of your ATM receipts or vouchers to match them with the card statement
  • If you have multiple cards, try to carry only one around. Will help in case your wallet is robbed/lost
  • While logging onto your bank’s website, ensure your password is not saved on the browser
  • Do not give out card information to anonymous callers or on emails
  • Look closely for tampered swiping machines or overlapping keypads

 

Post Credit Card Fraud

If despite maintaining precautions with regards to your credit card, you still fall prey to credit card fraud; then do the following:

  • Notify your bank or card provider’s customer care team, and note down the representative’s name and the complaint reference number.
  • If submitting a physical letter, keep a photocopy of the same as proof
  • File a First Information Report (FIR) at a police station
  • In case of online fraud, file a complaint with a cyber-police station in your area

Your credit card company or bank’s vigilance department then takes over the investigation. In case of any fraudulent money transactions reported, the account is frozen and tracing of the amount starts. The bank account where the money is transferred to is contacted. In case of any online shopping activity, the online merchants are contacted.

In the rare instance that your bank does not reply to your complaints or outright rejects it, you can contact a banking ombudsman. His role is to resolve customer complaints of banks relating to credit card, deficiencies in services promised by bank sales agents, or levying service charges without prior notice to a customer. You can either send an email or courier your complaint letter.

 

Loan Singh is a digital lending platform that prides in providing unsecured personal loans online to salaried individuals. You can apply for quick funds as an easy emergency loan which is not a bank loan, but unlike banks are provide with best personal loan interest rates. The instant funds or instant loans are small loans or cheap loans taken for purposes such as home improvement loan, house repair loan, marriage loan, medical loan, second hand car loan, second hand bike loan, vacation loan, travel loan. You can calculate your easy EMIs using our personal loan emi calculator. We accept bank statement, PAN and Aadhaar for quick loan approval. Bad credit score or credit report errors can lead to personal loan rejection.

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