Credit Card Frauds

Credit Card Fraud

Unfortunately, fraud is becoming an ever more common threat to consumers - particularly when it comes to using you credit card. What's more, statistics show the price of credit card fraud is high - forcing cardholders and credit card issuers as much as $500 million a year.

Indeed, as technology advances, scammers acquire increasingly sophisticated ways of stealing our personal information. However, despite the fact that credit fraud continues to rise, many consumers are still unsure of how to protect their information. That's why it's important to learn as much as possible about credit card fraud, credit card fraud prevention and even the history of credit card fraud. If you are hit by credit fraud, be sure you know how to handle it. Learn what's involved in reporting credit card fraud will help you take the best and most efficient steps possible towards regaining control of your information.

Credit Card Statistics and facts

In the end of 2005, MasterCard and Visa generated a sales volume of more than $190.6 billion, from the circulation of approximately 56.4 million credit cards across Canada. Credit card fraud statistics show that about $2.8 million was lost due to credit card fraud, from fraudulent use of MasterCard and Visa alone. In total, credit card fraud costs cardholders and credit card issuers as much as $500 million a year.

Who pays for the loss? Everyone. Even if you haven’t been defrauded yourself, the cost of goods and services increases to pay off the credit and charge card frauds.

Credit Card Fraud and Technology

Transactions completed with credit cards seem to become more and more popular with the introduction of online shopping and banking. Correspondingly, the number of credit card frauds has also increased with the introduction of newer technology. From embossers to encoders to decoders, credit card counterfeiters are now using the latest technology to read, change, and implant magnetic information on counterfeit credit cards.

What Are Counterfeiters Doing with the Cards?

Counterfeiters mainly use fake identities to receive government assistance, unemployment insurance benefits, personal loans, and to scheme corporations and individuals. Counterfeit credit card is the most common type of credit card fraud and is responsible for 37% of the millions lost yearly by credit fraud in Canada.

Types of Credit Card Fraud

Credit fraud can fall into one of five categories:

• Counterfeit credit card

• Lost or Stolen Cards

• No-Card Fraud

• Non-Receipt Fraud

• Identity Theft Fraud

The percentage that each type of credit card fraud represents is described below:

• Counterfeit credit card: Makes up for 37% of all funds lost through credit card frauds. To make fake cards criminals use the newest technology to “skim” information contained on magnetic stripes of cards and to pass security features such as holograms.

• Lost or Stolen Cards: Cards stolen from their cardholders or lost by them account for 23% of all card frauds. Often, cards are stolen from the workplace, gym, and unattended vehicles.

• No-Card Fraud: Comprises 10% of all the losses and is completed without the physical card in hand. This can happen by giving your credit card information on the phone to shady telemarketers and deceptive Internet sites that are promoting the sales of their non-existent goods and services. • Non-Receipt Fraud: Is responsible for 7% of all losses. It occurs when new or replaced cards mailed by your card company are stolen during the process of being mailed. However, this type of fraud is on the decline with the card-activation process that most companies use. In 1992, non-receipt fraud represented16 % of the losses. • Identity-Theft Fraud: Accounts for 4% of all losses, and occurs when criminals apply for a card using someone else’ identity and information.

Source: Royal Canadian Mounted Police

Credit Card Fraud Prevention

With the growing number of people shopping online and by phone, credit card fraud is on the rise in the U.S. and abroad. In fact, the number of online credit card fraud is soaring as more and more people opt out of shopping malls and embrace online shopping. Many savvy Internet shoppers know that it’s more risky to give your credit card to a waiter in a restaurant than it is to purchase an item online through a secured connection. That is because nothing can prevent your waiter from writing down your credit card number and using it later. That's why finding more about credit card frauds, how it happens, and ways you can prevent it, is essential to safeguarding your money and identity.

What is a Credit Card fraud?

A credit card fraud is a transaction that is completed with your credit card by someone else. Often a fraudulent transaction is made hours after the credit card or card number is stolen or lost; often before the cardholder gets the chance to report the card as missing or stolen.

How do Credit frauds happen?

Credit card fraud can occur in a number of ways. So it’s important to treat your credit cards like cash and to become aware of the common ways a fraud may occur. The common types of fraud and the ways they can happen include:

• Lost/Stolen Credit Card: someone uses your lost or stolen credit card

• Identity Theft: someone applies for a credit card using your personal information

• Counterfeit Credit Card: Scammers duplicate legitimate credit cards for the use of fraudulent activities

• Non Receipt Fraud: Your new or replaced credit card gets stolen before you receive it in the mail

• No Card Fraud:Your credit number is being used to make transactions over the phone or Internet without your knowledge

Tipes for Credit Card Fraud Prevention

To prevent credit card fraud, as a cardholder, you should protect your card and card number to the best of your ability. Some tips for fraud prevention include:

• Sign the back of your credit cards

• Keep an eye on your credit card every time you use it

• Jot down your credit card number and keep it in a safe place

• Hold on to receipts of your credit card purchases

• Check your statements regularly and notify your credit card company if you see bogus charges on your bill

• Call your card company immediately after your card is stolen or lost

• Refuse to give out your credit card information over the phone unless you’re dealing with a trustworthy merchant

• Check that you’re on a secure website before making an online transaction

• Ignore emails that ask you to provide your credit card number via email

• Avoid ‘phishing’ scams by disregarding emails that require you verify your credit card information on a site

• Avoid lending your credit card

Reporting Credit Card Fraud

Credit card fraud costs corporations and credit card companies hundreds of millions of dollars each year and also costs cardholders time, money, and stress. If you suspect fraudulent credit charges, or have lost or had your credit card(s) stolen, take action immediately. Call your credit card issuers to report the credit fraud and prevent it from happening again.

According to Federal Trade Commission (FTC) anyone can fall victim to credit card fraud because scammers don’t care who you are, they just want your money. Research shows that fraud victims are often well educated, active in their communities, and somewhat affluent. So, the best step you can take when you recognize or experience credit card fraud is to report it! Once you report a lost or stolen credit card you can’t be held liable for the fraudulent transactions made with your credit card. So be proactive. Take action. Call to report.

Reporting a lost or stolen Credit Card

Contact the issuer(s) of the card credit if your card if lost or stolen. Most credit card companies provide a toll free number and a 24 hr service to their customers to deal with such emergencies.

In accordance to the law, once you report a lost or stolen card, you can’t be held responsible to pay for the fraudulent charges. However, you can be held liable for a maximum of $50 per credit card (US). Some credit card companies may even waive this fee for their loyal customers.

Reporting Bogus Charges on your Credit Card Bill

If you find a bogus charge made to your credit card bill, and haven’t lost your credit card, it could mean someone else may be using your credit card number without your consent. This ‘no-card’ type of credit card fraud can occur when someone jots down your card number when you use your card at a restaurant or store. So when you spot any bogus charges on your credit card bill call your credit card issuer. Also, contact your local authorities if you suspect someone you know is using your credit card number. Authorities may ask you to sign a statement under oath to indicate that you didn’t make the purchase(s) in question before investigating.

The Federal Trade Commission (FTC)

In the US, cardholders can report credit card fraud to the FTC and to regional and local law enforcements. The FTC works to stop fraudulent and unethical business practices and provides customers with information on how to recognize, report, and protect themselves from such fraudulent behaviors.

Although, FTC as a policy doesn’t investigate reports of fraud under $2000, local law enforcements may do. However, this depends on the amount, type of fraud, and the location of the fraud.

follow Many consider credit cards and their use as a recent trend that took place during the late 20th century, but the truth is that credit cards have been around longer than most people think.

Unless you have been living under a rock or amidst the Amazon rainforest for the past hundred years without any access to modern civilization, we all know what credit cards are used for. A credit card is method of selling and buying goods without having to deal with cash. You can use credit cards anywhere today from shopping transactions to doing business online. So, now the question comes to this: Who invented these ever so popular credit cards and how long have they been in use? According to researchers, credit cards have been around since the 1920's in the United States when individual firms such as oil companies and hotel chains began issuing them to customers. However, some say that credit card use began as far back as the 1890's in Europe. Researchers also say that credit cards back in those days were not made of plastic but most probably from metal coins, metal plates, celluloid, metal, fiber or paper.

In 1946, John Biggins of the Flatbush National Bank of Brooklyn in New York invented the first bank credit card. Biggins invented the "Charge-it" program between bank customers and local merchants where merchants deposited sales slips in the bank after which the bank billed the customer.

In 1950, Frank McNamara invented the Diners Club credit card, which was intended to pay restaurant bills. A customer would eat at a restaurant that accepted the Diners Club credit cards and would later repay the club. In 1958, American Express issued their first credit card and the Bank of America issued Visa later in 1958. By the early 1960's, companies offered credit cards to traveling salesman and promoted them as time saving device and a few years down the road, credit cards became a huge sensation.

Contrary to popular belief, credit cards can be helpful tools if managed properly, and when carefully analyzed for the best rates and terms. Find out more.

What is online Credit Card Fraud?

Credit card fraud has become such an issue that no precise number can truly defined the global losses. And while most financial institutions are rather sensitive about the subject, a report from the FBI indicated that credit cards were largely responsible for the $315 billion loss the U.S. endured from financial fraud in 2005. A recent study in Europe also revealed that well over 22 million consumers fell victim to credit card fraud in 2006.

To truly understand the risk and likelihood of credit card fraud, you must first make yourself familiar with a brand new lingo. Terms such as "phishing", "pharming", "skimming" and "dumpster diving" may not sound malicious, but these are in fact just a few of many ways that money can be thieved from your credit card.

Below you will find more details on these popular techniques and how they are used to commit credit card fraud:

Phishing - This technique refers to randomly distributed emails that attempt to trick recipients into disclosing account passwords, banking information or credit card information. This one scam has played a major factor in the crisis we face today. Since phishing emails typically appear to be legitimate, this type of crime has become very effective. Well designed, readily available software utilities make it nearly impossible to trace those guilty of phishing. Phishtank, an anti-phishing organization, recently revealed that nearly 75,000 attempts of this nature are made each month.

Pharming - This new technique is one of the most dangerous of them all. Pharming involves a malicious perpetrator tampering with the domain name resolution process on the internet. By corrupting a DNS, (Domain Name System), a user can type in the URL for a legitimate financial institution and then be redirected to a compromised site without knowledge of the changes. Unaware of the background predators, the consumer types in their bank account details or credit card number, making them the latest victim of fraud.

Skimming - refers to a process in which a special device is used to copy encoding data from the magnetic strip of a credit or debit card. This device is usually secretly mounted to an ATM machine as a card reader. Dumpster Diving - this shameless act refers to a process in which an individual vigorously sift's through someone else's trash in search of personal and financial information. With a mere credit card approval that contains a name and address, a criminal can easily open up a credit card in your name and accumulate substantial debt in no time.

Taking Action

When credit card fraud strikes, it's crucial that you take action immediately. The longer you wait, the greater the damage inflicted, and the longer the road to be traveled to resume your identity.

Here is what can be done if you suspect credit card fraud:

Immediately call the credit card issuer if your card is stolen or lost

Take an extra step by following up that phone call with a letter to the card issuer. This letter should contain the date the card came up missing, the date you reported it as lost and the pertinent details of the card

After reporting credit card fraud to the issuer, you should be sent an affidavit in the mail. Fill out the form in it's entirety, sign and promptly return it. You can learn many more ways to protect yourself from credit card fraud by visiting www.ftc.gov , the website for the U.S. Federal Trade Commission.