2 Different Kinds Of Credit Card Fraud You Need To Know

Friday, December 18, 2020, 6:00 PM | Leave Comment

Credit cards are ubiquitous staples of modern commerce. They are payment cards that allow consumers to purchase goods and services with the promise of reimbursing the issuing entity of that card.

Transactions can be done both in person at a store by having the cashier swipe the card or enter its information into an automated system manually or online by entering the data into a browser by oneself.

Like any modern digital convenience, however, credit cards are vulnerable to fraud, whereby their information is stolen, resulting in the potential for unauthorized individuals to conduct fraudulent transactions with it.

This is possible with an unsecured website or identity theft scheme. With this information in mind, the following are two different kinds of credit card fraud you need to know about.

2 Different Kinds Of Credit Card Fraud You Need To Know

  1. CNP Fraud

    The first kind of credit card fraud you need to know about is called card-not-present or CNP fraud, which happens in the absence of the card itself, mostly over the telephone or online.

    This sort of fraud is becoming increasingly popular as customers increasingly enter their credit card information online or give it over the phone rather than swipe or hand over the card itself during a so-called card-present purchase at the point of sale.

    This form of fraud is the largest contributor to credit card fraud as a whole, occurring primarily when information is stolen to conduct purchases. CNP has skyrocketed in popularity because of eCommerce’s growth and greater security surrounding other fraud forms.

    Thankfully, there are ways to deal with this sort of fraud once it has happened: contacting the bank to cancel the card; many credit card providers nowadays have built-in detection systems to temporarily freeze a card based on any suspicious or unusual activity until you can be confirmed as the real cardholder. This can be a minor inconvenience during international travel but is quickly resolved by notifying the bank ahead of time.

    Preventing such fraud from occurring in the first place can be achieved by taking some due precautions about sharing any information online, in person, or over the telephone. Once thieves have obtained your information, they can spend as much as they desire until the credit limit is reached or the account runs out of money.

  2. Skimming

    The second kind of credit card fraud you need to know about is counterfeit and skimming fraud, which occurs when information is stolen to make fake credit cards. Skimming refers to devices’ theft of credit card information from the magnetic stripe. It often happens when devices called credit card skimmers are affixed to merchant’s terminals or ATMs or used by an unscrupulous passerby.

    The information stolen can be used to make counterfeit cards or engage in CNP fraud. Advanced chip technology protection has dramatically lowered the amount of skimming to a tiny percentage nowadays, at least in Australia. In contrast, in the United States, a large amount of CNP and point-of-service or POS fraud continues to afflict a large number of credit cards.

    However, even with advanced chip technology protection in place, there is no guarantee of safety. As a result, due diligence on the part of the cardholder is still a must. Credit cards should be securely contained within a purse or wallet, and any ATM or other machine that appears to be tampered with in any way should be reported and subsequently avoided. It is also worth noting that skimming differs from phishing when your credit card information is provided to an entity under false pretenses.

    A typical example of this widespread sort of fraud is when a website that has an almost identical but not identical URL and logos poses as a legitimate one and requests credit card information from an individual, who may not detect the subtle differences in the websites and thus fall victim to the fraud. Thankfully, various means exist of countering Credit Card Fraud (PCI Compliance).

Credit cards have allowed us to conveniently make purchases and other financial transactions from our computers, phones, and in person at stores and other institutions. However, complacency can cause us to forget how easy it is for this information to fall into the wrong hands. Therefore, it helps to be informed.

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