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Credit Card Scam
Last Updated on:
Apr 08, 2010 12:50 PM
Credit card fraud is a wide-ranging term for theft and fraud committed using a credit card or any similar payment mechanism as a fraudulent source of funds in a transaction. The purpose may be to obtain goods without paying, or to obtain unauthorized funds from an account. Credit card fraud is also an adjunct to identity theft.
The fraud begins with either the theft of the physical card or the compromise of data associated with the account, including the card account number or other information that would routinely and necessarily be available to a merchant during a legitimate transaction. The compromise can occur by many common routes and can usually be conducted without tipping off the card holder, the merchant or the issuer, at least until the account is ultimately used for fraud. A simple example is that of a store clerk copying sales receipts for later use. The rapid growth of credit card use on the Internet has made database security lapses particularly costly; in some cases, millions of accounts have been compromised.
Identity theft can be divided into two broad categories:
Tips for Online Credit card exposure
The fraud begins with either the theft of the physical card or the compromise of data associated with the account, including the card account number or other information that would routinely and necessarily be available to a merchant during a legitimate transaction. The compromise can occur by many common routes and can usually be conducted without tipping off the card holder, the merchant or the issuer, at least until the account is ultimately used for fraud. A simple example is that of a store clerk copying sales receipts for later use. The rapid growth of credit card use on the Internet has made database security lapses particularly costly; in some cases, millions of accounts have been compromised.
Identity theft can be divided into two broad categories:
- Application fraud
- Account takeover
Application fraud happens when a criminal uses stolen or fake documents to open an account in someone else's name. Criminals may try to steal documents such as utility bills and bank statements to build up useful personal information. Or they may create counterfeit documents.
Account takeover happens when a criminal tries to take over another person's account, first by gathering information about the intended victim, then contacting their card issuer masquerading as the genuine cardholder, and asking for mail to be redirected to a new address. The criminal then reports the card lost and asks for a replacement to be sent.
Skimming is the theft of credit card information used in an otherwise legitimate transaction. It is typically an "inside job" by a dishonest employee of a legitimate merchant. The thief can procure a victim’s credit card number using basic methods such as photocopying receipts or more advanced methods such as using a small electronic device (skimmer) to swipe and store hundreds of victim’s credit card numbers. Common scenarios for skimming are restaurants or bars where the skimmer has possession of the victim's credit card out of their immediate view
Instances of skimming have been reported where the perpetrator has put a device over the card slot of a ATM (Automated Teller Machine), which reads the magnetic strip as the user unknowingly passes their card through it. These devices are often used in conjunction with a pinhole camera to read the user's PIN at the same time may also use a small keypad to unobtrusively transcribe the 3 or 4 digit Card Security Code which is not present on the magnetic strip.
Tips for Online Credit card exposure
- Use single-use, “disposal” credit card numbers as some larger banks are offering the same
- Review your credit card information regularly to make sure there have not been new issue cards or accounts
- Use separate credit card for online transaction and regular offline transaction and review the same regularly
- Shred any documents like credit card bills, bank account statements before you throw them to trash
- Always use two way authentication or three way authentication methods to participate online
- Apply phishing filter in your browser settings
- You can also use trusted 3rd party payment gateways like Google Checkout
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