Credit card fraud is an inclusive term for fraud committed using a payment card, such as a credit card or debit card. The purpose may be to obtain goods or services or to make payment to another account that is controlled by a criminal.
Credit card fraud can be authorized, where the genuine customer themselves processes payment to another account which is controlled by a criminal, or unauthorized, where the account holder does not provide authorization for the payment to proceed and the transaction is carried out by a third party.
Credit cards are more secure than ever, with regulators, card providers and banks taking considerable time and effort to collaborate with investigators worldwide to ensure fraudsters aren’t successful.
Causes of Credit Card Fraud
Credit card fraud is usually cause either by card owner’s negligence with his data or by a breach in a website’s security. Here are some examples:
- A consumer reveals his credit card number to unfamiliar individuals.
- A card is lost or stolen and someone else uses it.
- Mail is stolen from the intended recipient and used by criminals.
- Business employees copy cards or card numbers of its owner.
- Making counterfeit credit cards.
Prevention of Payment Card Fraud
Card information is stored in a number of formats. Card numbers – formally the Primary Account Number (PAN) – are often emboss or visible on the card, and a magnetic stripe on the back contains the data in machine-readable format.
Fields can vary, but the most common include: Name of card holder; Card number; Expiration date; and Verification CVV code.
However, a PIN isn’t require for online transactions. In some European countries, if you don’t have a card with a chip, you may be asked for photo-ID at the point of sale.
In some countries, a credit card holder can make a contactless payment for goods or services by tapping their card against a RFID or NFC reader without the need for a PIN or signature if the cost falls under a pre-determined limit.
However, a stolen credit or debit card could be use for a number of smaller transaction prior to fraudulent activity being flag.
Card issuers maintain several countermeasures, including software that can estimate the probability of fraud. For example, a large transaction occurring a great distance from the cardholder’s home might seem suspicious.