Credit Card Fraud – Credit Card Scam

Credit Cards are a convenient payment method, although they do carry 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. Credit and charge card fraud costs cardholders and issuers hundreds of millions of dollars each year. While theft is the most obvious form of credit and charge card fraud, it is not the only way fraud occurs. A more subtle form of fraud is misappropriation. The use of your card number (not the card itself) without your permission. Misappropriation may occur in a variety of ways. Examples are:

  • A phone caller says that you need only provide your card number and its expiration date to qualify for a special discount vacation
  • A thief rifles through trash to find discarded receipts or carbons to use the card numbers illegally
  • A dishonest clerk makes an extra imprint from your credit or charge card for his or her personal use

Fraudulent credit card information or credit cards themselves are usually obtained through:

  • Fake Web Sites
  • Theft
  • Pick Pocketing
  • Phishing
  • Credit Card Swapping at ATM Machines
  • Skimming

By being aware of the risks involved, knowing the types of credit card fraud and by following below guidelines you can protect yourself from credit card fraud:

  • Destroy your expired cards
  • Immediately sign new cards
  • Don’t keep your PIN in your wallet
  • Treat credit cards as if they were real money
  • Lost or stolen cards should be reported immediately
  • Be cautious when giving information to websites or unknown individuals
  • Verify transactions on your statement with your receipts
  • Keep an eye on the credit card when making transactions in shops
  • Don’t sign a blank credit card receipt
  • Don’t borrow your cards – if a friend wants to buy something on the internet and needs a credit card, be with him when doing a transaction or you do the transaction for him (he might become a victim of credit card fraud, due to lack of knowledge).
  • It doesn’t matter whether or not their website is encrypted. Encryption means that your data is secure between your computer and the merchant, not between your computer and the credit card processor. The merchant will have your card number regardless.If you’re buying from an unfamiliar or likely untrustworthy store, consider using a temporary/virtual card number that card companies like Citibank provide.


Watch out for suspicious behavior of your customers. Some characteristics are in common with fraudulent transactions, although none of this can be an actual proof of fraud it still remains a good measure of identifying suspicious behavior. This type of fraud can eat up your profits so watch out when a customer:

  • Buys a priced item on a new credit card
  • Purchases large amounts of expensive items and doesn’t seem to care for other amounts that can occur during the transaction (delivery, packaging…)
  • Making small purchases to stay under the floor limit
  • Asks what the floor limit is
  • Making random purchases with no regard size, price or quality
  • Takes the credit card out of his pocket instead of a wallet
  • Awkwardly or slowly signs the receipt
  • If asked, can not provide a photo ID
  • Validation date expired
  • Credit card seems counterfeited or information altered
  • Receipt signature differs from the one on the card


What are the common types of credit card fraud? Counterfeit Credit Cards, Account Take Over and Skimming. We are going to look at each one and describe it.

Account Take-Over

Obtaining personal information for a thief is just about the same as if he found a gold mine. If such occurs, the thief does not even need your credit card to empty your bank account. He phones your credit card company and changes your address information. Your current credit card will be reported stolen by him and he will request a new to be issued or he will order a second credit card on his name, pretending he is YOU, the authorized credit card holder, on the phone. This card will then be sent to the address which he changed before or he will obtain instructions where to collect it. Your statements also will be sent to this new address, making you unaware of the fraud. If you don’t get statements on a monthly basis at about the same day, you should contact your financial institution and check your records on file. Ask for address change or if any information has been changed without your direct approval.

A thief can also steal your new credit card when it still is in your postal box or anywhere on the way between the bank and you. This can be an organized crime scenario involving assistants, such as a postman who intercepts your mail before it is delivered to your address. A fraudster may even get a hold of information when credit cards are issued to a particular address, waits near your mailbox and takes your post. So if you get a notification about an important delivery, collect it as soon as possible, because the longer you wait, the bigger the chance for a fraudster to intercept it.

Counterfeit Credit Cards

Counterfeit or altered credit cards is in short, duplicating legitimate credit cards which are then used for fraudulent activities. Latest technology is used in accordance with lamination and embossing to create realistic looking credit cards. To the untrained eye these will appear real and you will not be able to recognize the difference, since a complete hologram as well as the magnetic strip is included in the fake credit card. How to identify such will be explained a little bit later, below.

Card Not Present

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

Credit Card Skimming

Electronic card reader, Skimmer, is used in stores legitimately when processing a transaction. However in the hands of a thief such a tool can be used to gather information for later usage in criminal activities. Usually a small electronic device is plugged into the real electronic reader and now gathering information of everyone who purchased at the store or done a money request at the ATM machine. Or a portable skimmer is used to quickly swipe your card through the magnetic reader while you are not looking. Such information will be used for later unauthorized purchases or making of a new counterfeit credit card. Usually done in restaurants or similiar institutions where you usually temporary lose sight of your credit card.

Security Features On A Credit Card

In this example we will use a mastercard. Visa’s security features are very similiar and those features that do differ will be explained. A Credit Card usually has 16 (some visa’s have 13) numbers embossed on their front, and every card has a BIN code. The BIN CODE is the first 6 digits of a credit card:

  • The first 4 digits stay for the country and credit card company
  • The 5th digit stays for the credit card type (debit card, gift card, credit card)
  • The 6th digits reveals if the card is a partnercard, secondcard, company card…
  • The remaining digits stay for the account number, with the last character being the check-digit

Credit Card Embossing:

  • MASTERCARD – The first of the 16 digits is a 5. VISA – the first of 13 OR 16 digits is a 4
  • MASTERCARD AND VISA – First four digits will be printed below OR above the embossed number
  • MASTERCARD – Usually a MC character will be embossed next to the expiry date. VISA – “V”,”CV”,”BV”,”PV” characters will appear next to the expiry date
  • MASTERCARD AND VISA – Embossed characters should be in alignment, same size, height and style

If you see ghost images of other numbers behind the embossed it means that those have been altered. If those have been altered there is a big chance that the hologram (the shiny image which changes colors if you move it) will be damaged. Also check if the expiry date has been altered.

Credit Card Signature:

  • MASTERCARD – A repeated colored “mastercard” name should appear on all signature panels. VISA – Same scenario, but with the name “Visa”
  • MASTERCARD AND VISA – A changed or altered signature panel can be glued, painted, discoloured, erased or covered with white tape
  • MASTERCARD AND VISA – Credit card signature should compare to the one on the sales receipt
  • MASTERCARD AND VISA – Signature panel will have a partial account number followed by a three digit validation code (CVV)


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9 thoughts on “Credit Card Fraud – Credit Card Scam”

  1. I got a call yesterday from my credit card fraud detection service. Someone has skimmed my debit card and a counterfiet card is out there being used. Luckily for me, I used my card recently, and the criminal with the counterfiet card used it only an hour or so later in a city hundreds of miles away. I immediately put a block on the card. Transactions that had already been made, but had not yet been transmitted to my bank are flagged as pending. I placed a fraud alert on my credit records immediately. Unluckily for the thief, they are currently in a vacation resort town and are problably staying in a hotel. When he goes to check out, it is hightly probable that he will be introduced to a policeman. The fraud prevention representative told me that their alert to merchants will indicate that the debit card is a counterfiet and that the police should be contacted. So if this dirt bag checked into a hotel and presented my card, the hotel knows by now that the card is fake and the police have been notified. Thanks to the diligence of the fraud detection service, only about $1000 of “my money” has been spent so far and my bank is rejecting all pending transactions.

  2. Wow, someone skimmed my card, made a new one and wiped out my account buying gaas in Lebanon within a few hours time! THe bank called me and all the transactions are pending so I should get my money back OK. I have no idea where this person could have “skimmed” my card as I am super careful with my card.

    Lebanon?!? At least it was an instant red flag to the bank!

  3. I got skimmed too or scamed either way someone got my bank card info and got something from a restaurant in London on the same day I used my bank card at 2 local grocery stores here in the United STates. As for me the charges went through, 2 seperate transactions on the same day, one after another for over $200 each and now my account is negative, not to mention 2 foreign transaction fees and 2 over limit fees. I blocked my card.
    Being that today is Christmas I will most likely have to wait until Monday for any action,but I did contact my bank and left a detailed message concerning this issue.
    From now on, if I ever use a bank card or credit card, I am checking the card machine for any suspicious add-ons and if I ever hand my card to a clerk, I want a manager present, both of their names, but the reciepts do show the terminal number and operator id, so most likely the employee would get caught.
    Hope this doesn’t happen to anyone else, people are cruel

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