21-03-2014, 03:03 PM
CREDUT CARD FRAUD
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INTODUCTION
INTRODUCTION OF CREDUT CARD FRAUD:
Credit card fraud is a form of identity theft that involves an unauthorized taking of another’s credit card information for the purpose of charging purchases to the account or removing funds from it.
redit 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. According to the Federal Trade Commission, while identity theft had been holding steady for the last few years, it saw a 21 percent increase in 2008. However, credit card fraud, that crime which most people associate with ID theft, decreased as a percentage of all ID theft complaints for the sixth year in a row.
WHAT IS STOLEN CARD?
When a credit card is lost or stolen, it may be utilised for illegal until the holder notifies the issueing bank that the card is lost. Most issueing banks have free 24-hour telephone numbers to encourage prompt reporting. Still, it is possible for a thief to make unauthorized purchases on a card before its cancellation. Without other security measures, a thief could potentially purchase thousands of dollars in merchandise or services before the cardholder or the card issuer realize that the card is in the wrong hands.
The only common security measure on all cards is a signature panel, but, depending on its exact design, a signature may be relatively easy to forge. Some merchants will demand to see a picture ID, such as a driver's license, to verify the identity of the purchaser, and some credit cards include the holder's picture on the card itself. In some jurisdictions, it is illegal for merchants to demand card holder identification. Self-serve payment systems (gas stations, kiosks, etc.) are common targets for stolen cards, as there is no way to verify the card holder's identity.
A common countermeasure is to require the user to key in some identifying information, such as the user's ZIP or postal code. This method may deter casual theft of a card found alone, but if the card holder's wallet is stolen, it may be trivial for the thief to deduce the information by looking at other items in the wallet. For instance, a U.S. driver license commonly has the holder's home address and ZIP code printed on it. Visa Inc. offers merchants lower rates on transactions if the customer provides a zip code.[7]
APPLICATION FRAUD
Application fraud happens when a criminal uses stolen or fake documents to open an account in someone else's name without authorisation. Criminals may try to steal documents such as utility bills and bank statements to build up useful personal information. Alternatively, they may create counterfeit documents.
ACCOUNT TAKEOVER
Account takeover happens when a criminal tries to take over another person's account, first by gathering information about the intended victim, and then contacting their card issuer while impersonating 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.
Some merchants have introduced a new counter-measure to protect their consumers and their own reputation, where they ask the buyer to send a photocopy of the physical card and statement to ensure the legitimate usage of a card.
SKIMMING
Skimming is the theft of credit card information used in an otherwise legitimate transaction. 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 victims’ 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 The thief 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. Call centers are another area where skimming can easily occur.Skimming can also occur at merchants such as gas stations when a third-party card-reading device is installed either outside or inside a fuel dispenser or other card-swiping terminal. This device allows a thief to capture a customer’s credit and debit card information, including their PIN, with each card swipe