Credit Card Fraud: Things You Didn’t Know

Credit Cards are a convenient payment method, but this conveniences brings about some risks. Fraud with the use of stolen credit cards is committed for the purpose of obtaining goods without paying, to obtain unauthorized funds from a bank account or to sell stolen information further.

What Is Credit Card Fraud?

What Is Credit Card Fraud

Credit card fraud costs cardholders and issuers hundreds of millions of dollars each year. While physical theft is the most obvious form of credit card fraud, it is not the only way fraud occurs. A more subtle form of fraud is misappropriation.This is where someone uses your credit card details rather than the physical card to make purchases, without your consent to do so. After all, it is extremely simple to enter a credit card number in an online store and make a purchase without the need to have access to the card itself. Misappropriation can take many forms, some of these might be as follows:

There are many ways in which fraudulent credit card information can be gathered, this might include any of the following common ways:

  • Scam websites
  • Information interception on a vulnerable website
  • Information interception with installation of bad or hidden software
  • Physical theft
  • Phishing
  • Credit card swapping at ATM machines
  • Skimming

To put it in simple terms credit card fraud can be any instance in which someone uses your credit card without your explicit permission to do so. Those committing credit card theft gain access to your card number, PIN code or other information in order to make purchases that have not been authorised by yourself. This can be done either with or without the actual credit card since purchases can be made online using just the details. Using a two factor authentication in this case can prevent many such fraud attempts.

With the relatively new contactless payment, if a fraudster has hold of the credit card, they can make purchases without the need to do anything other than present the card. However the amount that can be deducted without contact is usually limited. If the total payment exceeds this limit, entering a PIN number will be necessary.

There are ways in which you can effectively protect yourself against credit card fraud, and in this article, we are going to look at how to do this in detail. We will also look at the various different forms that credit card fraud can take so that you can be well armed against it.

How To Detect If Your Credit Card Has Been Stolen

How To Detect If Your Credit Card Has Been Stolen

If your credit card has physically gone missing, it is a sign that it may have been stolen. Of course you may have simply misplaced it but until you are absolutely certain of its whereabouts, it is a wise idea to freeze or cancel the card and report to your card company’s fraud department so that they can monitor any recent activity.

However, since many forms of credit card fraud take place without the physical card being used, you might not even notice that any crime has been committed until you receive your high statement. But there are ways in which you can detect whether or not your credit card has been stolen:

  • Regularly check your online credit card statement. By monitoring every bit of activity on your account, you will easily be able to notice any purchases which have been made that were not made by you.
  • Many times, fraudsters will only make small purchases in order to avoid detection, especially on credit cards which have a high limit. Keep vigilant in checking for small charges that look suspicious.
  • Names of companies which you do not recognise or are not those from which you usually make purchases can be a sign of credit card theft.
  • You might notice charges which have been made in unusual locations which differ from the places you frequent, if you notice this it could be an indicator that your card is being used elsewhere.
  • A low available balance is another sign that your card may have been stolen especially if you are someone who usually stays well clear of their credit card limit. If money keeps disappearing, it might suggest something more sinister.

Signs of a Stolen Credit Card Being Used

Signs of a Stolen Credit Card Being Used

It is not just card holders who can detect if a card has been stolen, but merchants and companies should remain alert to signs that a stolen credit card is being used within their business. There are certain signs which can be observed that may help professionals to catch credit card theft in action. Whilst these behaviours may not provide solid proof that credit card fraud is taking place, they can certainly be a good indicator. Credit card fraud can eat into the profits of a business and some of the following may point towards it. Some of these behaviours may look like some of the following:

  • Customers who spend large amounts of money and do not appear to be phased by the addition of extra purchases such as delivery or insurance etc.
  • A customer who makes repeated small purchases in order to stay below the floor limit or contactless limit.
  • A customer who asks what the floor limit is.
  • For purchases which require a signature, the customer may be slow or awkward when signing.
  • For instances when proof of identity is required, the customer is not able to provide a valid form of identification.
  • The credit card itself seems to be tampered with or counterfeited.
  • Any signatures made by the customer do not appear to correctly match the signature on the credit card.

Most Common Credit Card Fraud Types and Examples

Most Common Credit Card Fraud Types and

As we mentioned earlier on, there is more than one type of credit card fraud, and it is important to be aware of the different forms it can take in order to be better prepared to take action should it happen to you. There are many different types of credit card fraud, but there are some which are more common than others. We are now going to take a look at these various forms of credit card fraud in a bit more detail.

Account Take Over

When a person who is committing fraud discovers your personal details, this is the pinnacle of their work, the icing on their cake and the pot of gold at the end of the rainbow. These details are all the thief really needs in order to commit fraud against you, they certainly do not need your physical credit card.

The thief can contact your credit card company using your personal details and request a new card by reporting it stolen, they can even change your address so that the new card arrives at their address rather than your own. Some thieves may even simply request a second card all whilst pretending to be you. This way, you will not be aware that your card has been cancelled and a new one sent out. Once the thief has completed this phone call, they will then receive any correspondence related to your card, this includes statements, bills and other mail from the credit card company, leaving you completely in the dark. Therefore, if you cease to receive paperwork related to your credit card account, it is essential that you contact the company and have them take a look at your account. You might even request information on what the current address linked to the account is.

Another common way of account take over is by the theft of the actual credit card before it reaches you. This could be from someone handling the envelope containing the card, whether that is someone from the credit card company itself or someone working to deliver your mail, the sealed card will need to pass through many hands before it gets to you. The card may even be taken directly from your mail box by an opportunist thief. If you have requested a credit card to be sent out to you, it is worth asking the company how long delivery usually takes and if the card has not arrived within this time frame, contact them immediately to let them know.

Counterfeit Credit Card

A counterfeit is something which has been altered, copied or duplicated and can apply to a whole host of different things but in this case applies to the credit card. These counterfeit credit cards will appear just like any legitimate credit card but will be a copy of the original. Thieves achieve this by using high end technology to laminate and emboss the credit cards to look just like a regular card. They will even include a legitimate looking hologram and magnetic strip to make the credit card indistinguishable from the original.

The counterfeit credit card can then be used to make purchases and complete transactions in exactly the same way that any other card can be used, making it difficult to notice any wrong doing.

Credit Card Skimming

The electronic reader for cards or skimmer is used to make purchases within stores and businesses and is perfectly legitimate and usual. however when in the hands of someone who is out for their own gain, this can be extremely dangerous for you and profitable for them.

Skimming is done by attaching a small electronic device to the reader in the ATM or card machine. This device reads any information from cards used in that particular ATM or card machine and stores it electronically. There is also the portable method, which is a separate device that a credit can can be swiped through when the owner is not paying attention. This is often done by store clerks who are taking part in credit card fraud.

Once the information has been gathered, criminals can then use the details to make unauthorised purchases. This type of credit card theft usually takes place in locations such as restaurants where your card is temporarily taken out of your sight whilst making payment.

RFID skimming will happen the same way as regular skimming, the difference is just that the information on a RFID enabled credit card can be transmited without a contact. The attacker will use a strong directional antenna that could potentially read RFID enabled credit cards. These RFID credit cards however are protected with an encryption, so even if an attacker receives information from the credit card, it will be encrypted. Encryption may be hard to bypass, thus committing an RFID crime succesfully might seem easier said than done.

Card Not Present Fraud

Obtaining credit card and personal information for unauthorized usage of such information for fraudulent activities over the internet, phone or mail.

Credit cards for whose expiration dates, number and name are known to the thief, they can be used online without the need for the credit card in their hands. This occurs because the expiration date, name and credit card number are all on the front side of the credit card. And sometimes the scamming aspirants may only get a hold of information on this frontal side. They will either memorize this information or use a camera to make a picture.

If a verification code from the back of the card is required, thieves will often make smaller purchases whilst trying to guess the code. After all with a 3 digit number there are only 999 possible combinations.

Application Fraud

In much the same way that identity theft occurs, fraudsters can assume your identity and apply for a credit card in your name. The debt that they subsequently rack up will then be stacked against you and your credit rating. There are many safety measures in place within the banking industry and so it is becoming increasingly difficult for criminals to commit this type of fraud but it does still happen and you should be aware of it.

In order to apply for credit cards, companies will often require certain documents to verify your identity and a thief will have no qualms in stealing or creating false documents in order to qualify for application.

Credit Card Fraud Protection Tips

Credit Card Fraud Protection Tips

It may seem absolutely frightful to think how easily your credit card or credit card details might be stolen. But fortunately, there are ways in which you can protect yourself from falling victim to this crime. By being vigilant and following some simple guidelines, you can successfully minimise your chances of being targeted by credit card theft.

  • Keep your credit card secure and safe. It goes without saying that if your credit card is not within easy reach of potential thieves, they won’t be able to get their hands on it. Always ensure that you keep your credit card safe and away from prying eyes. Do not be embarrassed to ask a waitress or store clerk to keep your card in plain view whilst making a transaction. When taking your credit card out and about, make sure that it is not within reach of anyone looking to pick pocket. Also remember that anyone could take a quick snap of your credit card should you leave it in view, so always ensure that the number is not exposed for any longer than is necessary.
  • Dispose of your statements and expired credit cards properly. If you have to throw out anything which contains your credit card information, it should be disposed of correctly. This can be done most effectively by shredding or burning any paperwork containing your credit card details. Never discard your credit card statements in a public trash can or waste disposal site.
  • Do not give out your credit card details. Even if someone who you trust completely asks you to disclose your credit card information, do not do it. They may not personally use the information against you but it simply takes someone overhearing or the person making a note of the details which then gets discovered by a third party to begin the process of credit card theft. Keep this information solely for you.
  • Verify the value of all purchases. When shopping, if you must sign a receipt always ensure that the purchase price is clearly detailed and never sign a blank receipt. If you receive a receipt which does not show an amount, ensure that you personally write a 0 in the appropriate place or draw a line through it. Without doing so the clerk could enter any amount they see fit and send it to your credit card company.
  • Be mindful online. So many credit cards fraud schemes are made online these days so it is vital that you be extremely careful when on the internet. Many scammers will target their victims via links in emails. These emails are designed to look as though they have come directly from the card issuer, and will contain a link to a malicious website which can obtain your details. Do not click on anything that you receive in an email, contact your credit card company to check the legitimacy of the message. The same applies with online shopping, always ensure that you only ever make online purchases with a credit card from websites which you can trust. If you need to buy from an unfamiliar or likely untrustworthy store, consider use a different payment method or a temporary/virtual credit card.
  • Keep on top of your statement. It may be obvious but monitoring your credit card account is the best way to detect and fraud and take action against it right away. Read through your statement carefully each time you receive it and look carefully at every transaction to be sure that you recognise it as one of your own. Most credit card providers have a mobile app which you can easily check daily to ensure that all purchases are your own.
  • Be vigilant when using ATMs. Earlier on, we discussed the use of skimmers which are attached to ATMs and card readers in order to obtain information. When using any of these services, always be on the lookout for anything which looks suspicious about the machine. If you notice anything that doesn’t look normal, it is best to avoid using the ATM altogether.
  • Don’t keep your PIN in your wallet. It is best to memorize it or to save it in a way that only you will know. Normally, a PIN can be changed to make it more memorable, but the numbers chosen should not be easy for another person to guess. For example, avoid the birthday of a loved one or your own or your wedding day.

TIP: You could for example save your PIN and masquerade it as a shopping list.
6x eggs, 2x bread, 1x milk, 4x apple. That would mean your PIN number is 6214.

Or instead of numbers you can use letters that correspond to the position of the letter in the alphabet. For example the word DAN would mean D (4th letter), A (1st letter), N (14th letter). Your PIN in this case is 4114. You would then save this word DAN somewhere instead of your PIN.

Better yet is to use your own personal system and use the above two examples as a guideline.

Features on a Credit Card

Features on a Credit Card

As well as following the above safety tips, it is worth knowing the format and features of a genuine credit card so that you can be on the lookout for any counterfeits, especially if you work in an environment where you frequently see cards or take payments yourself. Below you will see the features of a credit card followed by some ways to determine whether the card is real or a copy.

  • Most credit cards have a 16 digit number across the front which has been embossed onto the plastic.
  • The 4 digits at the beginning of the credit card number tell us which country the card is from.
  • The 5th digit determines what type of card it is, debit/credit/gift card.
  • Digit number 6 shows whether the card is a secondary card, personal card or a business card.
  • Any numbers after this are unique to the account to which the card is linked.

In order to determine whether a credit card is legitimate, there are things you can look for on the card itself. Check out the following hints:

  • Check the hologram, if there is any damage, the card may be a counterfeit.
  • Has the expiration date been tampered with or altered?
  • Are there any ghost images of numbers on the card, especially around the embossed area?
  • Are the numbers evenly spaced and symmetrical?
  • Does the number correspond with the issuer? Amex card numbers start with a 3, Visa with a 4, Mastercard with a 5 and the Discover card starts with a 6.
  • Is the signature strip white?

How to Report Credit Card Theft

How to Report Credit Card Theft

If you are unfortunate enough to become a victim of credit card theft, it is important that you act quickly in order to reduce the very real risk of having to foot the bill yourself. As soon as you notice any suspicious activity on your credit card account, you should take the following steps:

  • Using an online banking tool or via the telephone immediately have the credit card frozen or cancelled.
  • Report the fraud or suspicious activity to your credit card company who will remove all liability from you for any fraudulent transactions. This can be done by contacting their dedicated fraud team.
  • Change all your online passwords related to the account.
  • Keep a close eye on your account and report any further activity you may notice.
  • Make a report to your local police department as this is a serious crime which needs to be investigated.


Sadly, credit card theft is a frequent crime which we see being committed. However, there are ways to protect yourself from becoming the next victim of this type of fraud. By making yourself aware of the various forms of credit card fraud, you will be better equipped to notice if these things begin to happen to you.

It is important to take steps to ensure that your credit card details are as difficult to come by as possible, as this will act as a deterrent to thieves, after all they want their job to be easy so it is up to you to make it hard. If you do see anything on your credit card account that you do not recognise or you lose your card, you should report this to your credit card provider straight away.

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