Credit Card Fraud

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 unauthorized use of a credit/debit card, or card number, to fraudulently obtain money or property is considered credit card fraud.  Credit/debit card numbers can be stolen from unsecured websites, or can be obtained in an identity theft scheme.

How victims are tricked:

“Card Not Present” Orders - Orders placed via Internet and mail are a frequent target of credit card fraud because the actual, physical card is not required or visible for the order. Such transactions allow thieves to use stolen cards without exposing themselves to the risks of in-store shopping (such as being caught on security cameras or apprehended by police.) Unfortunately, card not present fraud penalizes two parties: the original consumer who had their card stolen, and the merchant who unknowingly processed fraudulent orders and will, in all likelihood, have them charged back when the original consumer protests. Card not present orders are also less likely to be investigated, since there are, again, usually no immediate red flags that distinguish stolen card orders from legitimate ones.

Phishing : A more modern form of credit card and bank fraud is the so-called “phishing” attack. Rather than rooting through your trash or swiping your wallet at a busy intersection, sophisticated Internet hackers simply lead victims into an authoritative-looking website (usually one claiming to be their bank or credit card company.) Once the victims land on these websites, they are asked to fork over their credit card or bank details as part of a “routine security check.” At no point is it clear that such websites are stealing your information. Indeed, great care is taken to mimic the look and feel of real bank websites down to the most intricate details (including logos, URLs and slogans), such that the entire process of keying in your information feels natural and safe. Only once you have clicked “Submit” will your credit card information fall into the hands of ruthless identity thieves.

Skimming : Skimming is perhaps the form of credit card fraud most difficult to prevent. While the methods above all involve outside criminals, skimming is when a dishonest employee interferes in legitimate transaction that victims did make. An example would be if you walked into an electronics store and bought an iPod on credit, only to have an unscrupulous clerk record your card data and take a spending spree on your tab. Sadly, this is not only difficult to prevent. It is also difficult to detect, after it has occurred. Generally speaking, the last person a defrauded consumer suspects is the friendly store clerk who checked them out. Therefore, it is only once a particular merchant has been involved with a substantial number of credit card fraud incidents that they are even suspected of skimming, much less investigated or prosecuted for any wrongdoing. A merchant who skimmed only once in a while might, in all actuality, never be suspected of anything for as long as they remained in business.

Victim of credit card fraud - What to do if it happens to you ?

1. Nowadays the moment your card is swiped you get alert on your mobile or email. Keep note of it and read it regularly. If not  getting alert then ask your bank to start such alert, some banks charges you pay the charges its worth paying for alerts.
2. If you came to know through your statement as soon as you received it within 7 days you inform the bank about unauthorized entry in your statement.
3. First of all inform the credit card company about you not accepting the transaction and tell them to freeze the credit card.
4. Do not use the word i lost my credit card, deny the transaction using email and keep record of it also record the call made to credit card company for freezing you credit card. Do rember the name of the bank officials.
5. Keep record of the communication between you and the bank and do not take or believe on any verbal assurance given by bank officials. Insist everything in writing.
6. In case your credit card was used offline at any mall, petrol pump, shop etc ask the bank to produce the counter slip which is used to authorize the the purchase and check the signatures on it. If it does not matches your signature you are safe even if it matches you still don't have full onus as you can claim that you are victim of card skimming. Also don't go and visit the shop etc as this may weaken your case. Let the merchant identify you during police identification because if he fails to identify you the onus is on the merchant for not taking precaution and he is liable.
7. In case your credit card was used online, you can approach cyber crime cell of the police to get the IP address details of the computer used to access the site and use your card and the vendor on whose website the card was used  will provide you and later on police will catch the person based on the IP address given by the vendor.
8. Don't fall prey to the bank pressure tactic's of holding you liable for the payment. Keep you calm and take legal help and guidance. Don't give in. Do not pay any bill or portion of a bill that is a result of fraud.
9. If any merchant, financial company or collection agency suggests otherwise, restate your willingness to cooperate, but don't allow yourself to be coerced into paying fraudulent bills. Report such attempts to government regulators immediately.
10. To prevent being "charged back" for fraud transactions merchants can sign up for services offered by Visa and MasterCard called Verified by Visa and MasterCard SecureCode, under the umbrella term 3-d secure. This requires consumers to add additional information to confirm a transaction.

IMP NOTE:  In dealing with the financial companies, keep a log of all conversations, including dates, names, and phone numbers. Note the time you spent and any expenses incurred in case you are able to seek restitution in a later judgment or conviction against the thief.  Confirm all conversations in writing. Send correspondence using registered post with return receipt requested. Keep copies of all letters and documents.

Famous credit fraudattacks:

Between July 2005 and mid-January 2007, a breach of systems at TJX Companies exposed data from more than 45.6 million credit cards. Albert Gonzalez is accused of being the ringleader of the group responsible for the thefts.

In August 2009 Gonzalez was also indicted for the biggest known credit card theft to date — information from more than 130 million credit and debit cards was stolen at Heartland Payment Systems, retailers 7-Eleven and Hannaford Brothers, and two unidentified companies.

Negative option billing:

Negative option billing is the practice of sending goods automatically and billing the recipient unless the recipient is proactive in declining the goods before they are sent. Negative option billing reverses the usual direction of sales transactions. It assumes that unless you say 'no', you've agreed to have bought the goods. This is the common practice used in book clubs, record clubs, and magazine subscriptions with automatic renewal. Some practitioners of negative option billing prefer to call it "advance consent marketing".

Credit card hijacking:

Credit card hijacking was created by marketers who recognized that subscription based services generally have relatively low periodic billing amounts which will generally go unnoticed on any given credit card statement. So what happens is that long after the user loses interest in the subscription, they forget to cancel the subscription and because the periodic billing is so low, they don’t tend to notice it on their credit card statement.

A simple solution to this problem is to phone the credit card company, request a new card with a different account number, and cancel the previous account. They will transfer the debt amount from the old account to the new account.

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