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What Is Credit Card Fraud Again?

02.27.2012 · Posted in Business News Article

According to a report released by the Javelin Strategy and Research, over 11 million US adults were victims of identity fraud. This was the highest since 2003. Also, according to a survey carried out by Unisys Security Index, the Number 1 fear of US citizens in the midst of the ongoing global financial crisis is credit and debit card fraud. I could go on and on with statistics on credit card fraud but the point is you don’t want to be caught napping where credit card fraud scams are concerned.rnrnCredit Card Fraud DefinitionrnrnIn simple terms, it refers to the crime of using an individual’s credit card to purchase goods and services. However, it goes on to encompass a broader range of activities such as unauthorized fund withdrawals and several others. Considering the prevalence and circulation of credit cards in our society, it’s really not surprising the number of frauds committed each year and also points to the fact that anyone can be affected if proper precautions are not taken. rnrnHow Credit Card Schemes WorkrnrnWhile there are different methods of hatching and carrying out a fraud, they actually come under two major headings. The credit card can either be stolen or the card data compromised. A large number of frauds occur due to stolen cards with millions of dollars being lost each year but since the owner can quickly file a report and block the card, the damage is usually curtailed on time. rnrnHowever, for compromised accounts or data, the challenge is more insidious. This is more so because the information required for fraud can actually be obtained by tracking data supplied by the card owner during legitimate, routine and necessary transactions. For instance, it’ a known fact that credit card fraudsters often secure sales receipts issued after making a transaction. Furthermore, the advent of using credit cards for internet transactions has also contributed to the rise fraud due to compromised accounts.rnrnCredit Card Fraud CostsrnrnStatistics of credit card fraud reveal that a lot of money goes down the drain annually. The interesting is that whether you are a victim of fraud or not you get to pay for credit card fraud costs in one way or the other because the banks and credit card companies that have to foot the bills pass on the cost to customers. The annual cost of credit card fraud in the US amounts to over 8 billion dollars-with most of the losses being paid for by credit card issuers.rnrnPreventing Credit Card Fraud ScamsrnrnSeveral methods are used to counteract card frauds by merchants, card issuers, cardholders, government and regulatory bodies. Some of these methods include PAN truncation, tokenization, use of fraud prevention and detection software, investigation of fraudulent activities, prompt reporting of suspicious activities, strong authentication methods and industry collaboration and information sharing. Others include blocking the card till cardholders verify transactions, placing preventive controls on cards of victims and enacting protection laws for credit cardholders against fraud.

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