Typical credit card scams and the best way to avoid them
For scammers and criminals, credit cards are the most sought-after item. The data obtained from the Australian Payments Network shows that during the financial year 2017-18, the number of fraudulent transactions made by credit cards increased by 4.8 percent, to $565 million. This is over five times more than the sum lost to other scams when put together. https://gadcapital.com/direct-lender-payday-loans/
What exactly is credit card fraud?
The term “credit card fraud,” as per definition, is the fraudulent utilization of a credit card done through the theft of the cardholder’s data. Because of the advent of online and its infinite variety of online stores has brought, credit card fraudsters now have a much easier time than ever before stealing your information.
In earlier times, before the advent of the internet into our lives, you may have imagined credit card fraud as a guy dressed in black and stealing your account from your wallet. Nowadays, fraudsters are armed with various techniques to take your credit card. And the majority don’t need your actual card to do it.
There is a list of the top five prevalent kinds of credit card fraud out there, as for ways to recognize these types of fraud and what you can do if you’re snared by one.
The types of fraud that can be committed with credit cards
The five most common types of fraud involving credit cards, According to the Australian Payments Network, are:
- Card-not-present (CNP) fraud
- Skimming and counterfeit fraud
- Card fraud involves stolen or lost cards
- Card-never arrived-fraud
- False application fraud
1. Card-not-present (CNP) fraud
The fraud ‘Card Not Present’ is done without using a physical card, usually on the internet or by phone.
The amount lost in 2018 was $477,920,701
CNP transactions are becoming increasingly commonplace as consumers are turning away from using physical cards and instead input their personal information to purchase. For instance, making an online purchase purchasing something from eBay is a CNP purchase even though you’ve not read your information from the card. To qualify as a “card-present,” the card’s information needs to be recorded when you purchase, such as when it is pressed into a contactless reader placed into a terminal at a store or access an ATM.
Fraud involving not present cards is the most significant cause of all fraud on credit cards, accounting for more than the majority of fraud committed on Australian cards (this includes debit cards too). The number of cases increased by almost 8% during June 2017-to 18. It is typically when credit card numbers are stolen to purchase items. AusPayNet Director Dr. Leila Fourie states that CNP fraud is becoming so widespread due to the growing popularity of eCommerce and the increasing security of other forms of fraud.
“Combatting CNP fraud is now an important issue for the entire online commerce community, and we’re pleased by the significant progress made this year in establishing the framework to reduce CNP fraud. We believe that this entire industry strategy to help in reducing CNP fraud, the same way that chip technology is working to tackle fraud that is skimming,” said Dr. Fourie.
“Malware and attacks on phishing are getting more sophisticated, so be wary of texts and emails from unknown people with caution. Do not click on the link given and be wary of being enticed to reveal sensitive information like the password you use.”
So, be cautious with your credit card numbers online and avoid speaking too loudly when reading them on the phone. Be careful about who you permit to access details on your credit card in general, as thieves are having a field day with our information online. Once they have your card information, they might be able to spend as much as they want up to:
- You’ve reached your credit limit.
- Your account is drained of cash.
- Contact your bank and inform them that you want to cancel the card immediately.
Certain credit card companies can find suspicious transactions in your account (e.g., a few multi-thousand-dollar transactions are suddenly being made in Lagos). They may temporarily suspend the card until you confirm whether the activity is you. This could be an issue when you use the card while traveling abroad but provided you notify your credit card company of the travel plans before departure and don’t trigger unnecessary suspensions.
2. Frauds involving skimming and counterfeits
Skimming and counterfeit frauds occur when information is illegally obtained to create a fake credit card.
In 2018, the amount that was lost was $13,935,409 (Source: AusPayNet)
“Skimming” is the process by which an instrument steals the information of your credit card information from its magnetic stripe. This usually happens when a credit card skimmer device is connected to an ATM or a terminal for a merchant. It can also occur when someone snoops past you using a credit card device known as a skimmer. Information gathered from skimming may be used to make fake cards or be part of an old-fashioned fraud using cards that are not present.
The figure of $15 million ($23 million when you factor the fraud from overseas into consideration) could appear like a lot. Still, it has decreased quite a bit in recent years due to the ever-increasing protection provided with chip-based technology. For the financial year 17-18, it was reported that skimming fraud dropped between $42.3 million to just $23 million, the lowest ever recorded – and just 4percent of all card-related fraud today. This is a testament to Australian chip protection, the most advanced worldwide. However, in America, the number of stolen credit cards and three-quarters of them are thought by experts to have been caused by skimming and the POS (point-of-sale) security breaches, according to Gemini Advisory.
However, you should be vigilant when traveling in Australia however. Be sure to keep your credit card within your purse or wallet. If you notice that an ATM appears to be compromised, you should report it immediately and then move to the next one.
The process of skimming is different from phishing, which happens when you give your credit card details to someone pretending to be someone else or something else. For instance, a typical fraud is creating an imitation company that appears as a legitimate entity (let’s take, for example, Commonwealth Bank instead of Commonwealth Bank). It then sends an email asking for your card information. The scammers will typically feature very similar (or even the exact) logos to the existing businesses with similar URLs and are therefore easily swindled.
According to Scamwattch’s data, phishing is by far the most prevalent type of fraud reported in the United States, with less than 250,000 reports reported in the year 2018.
3. Card fraud involving stolen or lost cards
Fraud committed by stolen and lost cards is a problem with lost or stolen cards.
The amount lost in 2018 was $7,478,058 (Source: AusPayNet)
This one is pretty simple to comprehend – if your credit card is stolen or lost by a thief, it is free to use the card until it’s suspended, canceled, or it’s reached its credit limit. The loss of nearly $50 million was due to stolen cards between June 2017 to the end of 2018, so be aware of the whereabouts of your card at all times. You can prevent most of the damages (or the actual damage) by freezing or canceling the card as quickly as possible by calling your bank. Some banks allow this at the touch of a button on their mobile banking applications.
If you decide that you don’t require a credit card, Don’t throw it in the trash. It is still possible for thieves to take the card and use it as it’s still active. It’s best to cancel it and then slice it to avoid getting your card taken from the garbage bin.
4. Card-never arrived-fraud
“Card never arrived” fraud occurs when a customer orders a card that they do not receive it.
In 2018, the amount that was lost was $7,231,308 (Source: AusPayNet)
When you apply for a credit card, the card will always be delivered to you by mail. Fraud that never arrives on a card occurs when the card is stolen before it is given or if it was stolen by a thief who simply snatched the letterbox from which it came and then threw it away, which will be more probable.
To safeguard yourself from this type of fraud, To guard against such a scam, it is recommended that the Australian Payments Network recommends installing an unlocked mailbox or, at the very minimum, make sure you check your mailbox regularly.
5. False application fraud
False applications are frauds that occur when the account was opened with the help of someone else’s identity or other information.
In 2018, the amount that was lost was $1,393,902 (Source: AusPayNet)
Fraud on applications can refer to various types. It could be that someone can apply for a credit card using your name and racks up many debts, which ruins your credit rating. Maybe they’re applying to get a card with another name, but connect an account on your banking institution to that card, and the charges slug you. One could end up with hundreds of dollars with credit cards or ruin your credit score before you realize you’ve been cheated.
In 2014, an examination of credit card applications conducted by Veda discovered that $1.6 billion in credit applications were flagged as possibly fraudulent. The majority of credit card companies are very concerned about fraud on applications and run a series of balances and checks to ensure that there isn’t a chance of this happening, but this doesn’t mean that the occasional criminal doesn’t fall through the gaps. Be sure to keep an eye on your accounts at banks and keep confidential information secure. The most important thing is to take any fraudulent act seriously and report it promptly.
Credit card vs. debit card fraud
We’ve been referring to it as “credit card fraud” throughout this article; however, the majority of these types of scams also apply to debit card transactions. Scammers can still steal the debit card’s information by skimming, using unsafe websites, or simply swiping it from your wallet or the ground. But there’s a crucial difference.
A credit card is a kind of credit. This means that the money used to buy a stolen item isn’t legally yours at first. If you can report the fraud as soon as possible, the banks may block them and frequently declare the transactions invalid, meaning that you aren’t required to pay any amount. Credit cards also may have additional fraud prevention technologies that debit cards may not include.
On the other hand, debit cards are a direct connection to your bank account. The thief could wipe you out of your savings accounts, but there’s a chance that your report will be identified. Zero liability policies still cover many debit cards, meaning you’ll still be refunded. If the funds are gone, it may be months or even weeks before the company that issued the card investigates your claim and reimburses the funds.
How to stay away from fraud with credit cards
There are various types of debit and credit card fraud, and there are many options to prevent it. Implementing the steps listed below will help you stay safe from fraud.
1. Keep your antivirus software current
Maintaining up-to-date security and anti-virus software on your PC is an easy method to protect yourself from scams if you frequently conduct online shopping or banking. Ensure that it’s an authorized, trusted antivirus program: there are fake antivirus programs disguised as genuine ones that do the exact things you’ve tried to prevent by getting your information.
Particular anti-virus software programs provide paid versions that may be worth the investment to ensure your information is secure.
2. Be wary of sites that appear to be fraudulent.
Do not enter your credit card details on any website that isn’t classified as secure: You can verify this by searching for the security certificate at the top left in the URL (there is a small symbol for a lock) or by looking for the word ‘HTTP’://’ in the first line. The S signifies that the site has additional security, which reduces the chance of fraud.
Be wary of websites that won’t permit secure payment options like PayPal. Reviews from customers online can provide a reliable indicator of a site’s trustworthiness.
3. Be skeptical of messages from unknown sources.
Phishers could convince you to provide your personal information to fake businesses or individuals who appear accurate. If you receive a text or email from a legitimate website soliciting you to click an offer, remove the email immediately. If you receive an email or phone call asking you to do the same thing, hang up.
4. Check each statement every time it is
If your credit card was used by someone other than you, examining your monthly statements is best to detect it. It’s the same for bank statements as well. Spotting any suspicious activity made by your bank’s fraud detection system will stop additional fraud before it’s even started.
5. You should check the report of your credit report too
If someone has been applying for credit under your name or is quickly collecting several bills, conducting an uninvolved examination for the details of your credit report can also clue you. The next step is to contact your credit card issuer or reporting bureau to investigate the issue and get it removed from your credit report.
6. Don’t toss essential documents away.
Have you ever received those financial documents that arrive in the mail which aren’t opened and promptly go into the trash? If you’ve done this, it’s likely (although it’s unlikely) that criminals could gain access to these documents and use them to commit fraud using credit cards. If you decide to dispose of the documents, such as correspondence from banks, government letters, and personal papers, they must be destroyed or removed from view before being thrown away.
It’s never hurt to be with a sense of security.
7. Secure your mailbox
According to the Australian Payments Network, another method to be safe is to install a security lock on your mailbox. This can stop ‘card-not received fraud by stopping criminals from taking your credit card before you notice it. It also contains those who have access to those letters we talked about tossing away.
Other methods to avoid fraud with credit cards are:
- Protecting your PIN when you go to an ATM
- Examining ATMs for evidence of tampering or damage
- Canceling or locking a card when you realize that it’s not there
What should you do if you’ve been victimized?
The outstanding feature of debit and credit cards is that they generally are covered by a zero-liability policy. This means that they won’t hold you accountable in the event of “unauthorized purchases.” The guidelines are applied through the company that issued the cards, for example, Visa, Mastercard, or American Express in essence, which means your funds are protected in the event of:
- You’ve taken reasonable care to protect your card from theft or loss, as well as
- You promptly reported any loss and theft or loss to your bank.
This is why it’s crucial to inform your financial institution of card fraud as quickly as possible, which will allow you to eliminate the consequences of the scam.
Report scams if they are visible.
If you’ve been victimized, or you see something that you believe is a scam or may result in fraud with your credit card, There’s no shortage of people to reach out to:
- You can contact your local police station or bank
- Contact us via ACORN (Australian Cybercrime Online Reporting Network)
- You may report the issue to Scamwatch through the ACCC
Notifying potential fraudsters with credit cards before it happens could spare another person many thousands of dollars.
Savings.com.au’s two cents
Fraud on credit cards affects hundreds of thousands of Australians each year. It costs several hundred million dollars. Don’t fall into the statistic. Ensure your personal information is secure and know where and when your credit card is utilized and by who. If you are cautious and keep your eyes on yourself, you will be victimized by fraud, and your hard-earned money will be secure.