Credit Card Fraud: Types of Scams

Posted on: Jun 5, 2024 | 3 mins | Written by: HDFC ERGO Team

Credit Card Fraud: Types of Scams

In today’s era of digitalization, almost everything happens online, including transactions. You don’t need to carry cash everywhere you go. Although digital transactions save much of our time, they expose us to various frauds like credit card fraud. Despite several secure advances and encryption protocols employed by the banking sector, fraudsters can misuse your card by emptying your bank account. It seems scary, doesn’t it? But you don’t have to worry; we have curated a guide for detecting fraud with tips to prevent it.

What is Credit Card Fraud?

A credit card lets you spend on anything, borrow a maximum, and quickly pay off your balance. To cater to the different shopping habits of their customers, banks offer various types of credit cards. While credit cards have numerous advantages, the sad reality is that there is a synonymous increase in fraud. Credit card fraud refers to deceitful techniques, such as unauthorized transactions, identity theft, and account takeover. Such fraud can occur both online and in person. The primary goal of such scammers is to use the money in your bank account without your permission.

Cyber Insurance can shield you from online losses and preserve your safety if something goes wrong. It would allow you to conduct your online activities without the continual fear of cash loss due to cyber dangers.

How Does Credit Card Fraud Happen?

There’s no guarantee that fraud will only happen online; it can also occur via text or phone calls. Here are some ways in which there’s a possibility of fraud.

• Skimming your credit card at a petrol pump

• Hacking your device

• Calling regarding fraudulent prizes or wire transfers.

• Phishing attempts like sending bogus emails

• Looking over your shoulder during checkout

• Taking control of your email

Types of Credit Card Fraud

From credit card skimming to using stolen cards, various types of fraud involve your credit card.

• Credit Card Skimming

Credit card skimming means using a skimming device to obtain credit card information from the magnetic stripe of your credit card. These devices are often found in ATMs, petrol stations, and point-of-sale terminals, allowing hackers to save card information as you swipe the card.

• Lost or Stolen Card

Whenever your credit card is lost or stolen, hackers use it to make purchases until you notice your card is missing and block it.

• Card Not Present (CNP) Fraud

You only sometimes physically need your credit card to make any transaction. The cardholder’s name, card number, and CVV are sometimes enough for some transactions. Fraudsters generally access card information via phishing scams, data breaches, or card skimming and use it. This is known as a CNP fraud.

• Hacking

Hacking is the oldest method of financial fraud. Hackers hack your device or the bank database to obtain sensitive card information. Once they acquire it, they can use your credit card to make any transaction.

• Application Fraud

Application fraud uses stolen or fake identities to apply for new credit cards. Fraudsters submit fraudulent applications using false information to obtain credit cards to which they are not entitled.

• Phishing

Phishing is a new technique in which hackers send you an email posing as a legitimate bank employee. Once you click on the link they send, they take control of your device and gain unauthorized access to your payment information.

• Account Takeover

Account takeovers occur when fraudsters acquire unauthorized access to your credit card account. Once they get your card details, they will pose as you and contact your bank for a change of PIN or other card information.

How to detect Credit Card Fraud?

You’re vulnerable to credit card fraud in the following instances:

• If you are asked for credit card information from any bank employees. The bank never asks for such information.

• If there’s a transaction in your bank account that you don’t recognize,

• If there are any discrepancies in transaction amounts, merchants, or dates that you don’t recognize.

How to Prevent Credit Card Fraud?

As we all know, prevention is better than cure. It’s better to be vigilant and prevent fraud from happening to you by taking the necessary steps mentioned below.

• Keep credit card details private from everyone.

• If your card is stolen or lost, immediately contact your bank and block the card.

• Shred your documents before discarding them.

• Use two-factor authentication and biometric verification to add an extra layer of security to your accounts.

• Regularly monitor your bank account for any suspicious activity.

• Do not click on any suspicious links.

• When doing transactions at malls or petrol pumps, check the transaction amount before entering your PIN.

• Invest in good cyber insurance for the family as a shield against any cyber threat.

Credit Card Fraud VS Identity Theft

People often use credit card fraud and identity theft synonymously, but both are different. While the former involves stealing and using card information to make unauthorized financial transactions, identity theft involves stealing personal information like Aadhar card numbers and other sensitive information for various fraudulent activities.

Working professionals are always busy and need more time to examine details before making any transaction. This makes them vulnerable to fraud. Therefore, cyber insurance for working professionals acts as a defense against cyber attacks and helps secure their hard-earned money.

Conclusion

Credit card fraud is a severe threat today, but you do not have to worry. With the increase in awareness, it is possible to reduce this risk. For a while, the number of data breach cases has grown, and today, our sensitive information has been compromised more than ever. With the help of better awareness of fraud symptoms, advanced detection, refusal to share card details, and strong authentication, you can defend yourself against criminal activities. Always remember that awareness and taking necessary steps are two significant steps to guard against fraud.

FAQs

1. What is the best way to detect credit card fraud?

The best way to detect credit card fraud is by being vigilant and regularly monitoring your bank account for suspicious transactions. Additionally, do not share sensitive information like card number, PIN, and OTP with anyone.

2. What type of fraud is credit card fraud?

redit card fraud is a financial crime in which someone steals your card details and uses them to make a transaction without your knowledge.

3. Can someone use my credit card with just my card number and CVV?

Generally, to use a credit card, you need details like the cardholder’s name, card number, CVV, PIN, and OTP. However, there are instances when fraudsters can hack your device to get the OTP without your authorization.

Disclaimer The above information is for illustrative purposes only. For more details, please refer to policy wordings and prospectus before concluding the sales.

Types Of Frauds In Digital Payment Industry

Digital Banking Frauds and Tips to be Wary of Them

What to do if You’ve been Scammed Online?

Importance of IT Security for a Business

How to Protect Yourself as the Threat of Scam Apps Grows?