What is Credit Card Fraud?

Debit and credit card fraud is a term used to refer to theft or illegal use on someone’s credit or debit card information in purchases and other financial transactions like ATM withdrawals and money transfer. Debit or Credit Card Fraud is a form of Identity Theft.

Essentials of Credit and Debit Card Fraud

Debit or credit card fraud occurs when an individual commit one of the following:

1. Fraudulently obtaining credit or debit card information by skimming, stealing or buying from darknet sites.
2. Using another person’s credit or debit card without their permission. Sometimes using someone’s credit card even with their permission is against the terms of service of the credit card issuer and may result in termination of the card, therefore, it is important to understand your issuer’s Terms of Service and end user agreement before allowing someone to use your credit card.
3. Knowingly using an expired or revoked credit or debit card is also a form of credit card fraud.
4. Knowingly selling goods or services to a person using stolen, expired or revoked credit or debit card. This also applies to selling goods and services to people using other people’s cards without a proof of authorization.

Types of Credit and Debit Card Frauds

Credit Fraud is basically purchasing goods or services using credit cards or any other forms of credit payment options with the aim of evading payments. The following are the most common types of credit fraud:

1. Identity Theft

Identity theft is illegal use of someone’s private identification information in fraudulent activities and other cybercrimes. Private information can be obtained through spamming the email of the target, stealing, background checks and buying darknet sites.

2. Identity Assumption

Identity Assumption is unauthorized use of personal identification details over a long period of time.

3. Fraud Spree

Fraud spree, alternatively called carding, involves charging existing credit or debit accounts illegally. Carding is the charging or use of stolen cards in purchases. Most carders prefer to buy store-specific gift cards with stolen credit cards which can then be sold or used to buy goods.

Categorizing Credit Card Fraud Schemes

Credit card fraud is divided into application fraud and account takeover.

• Application Fraud

Application fraud involves gathering and illegally using someone’s private financial information to open a credit card account, bank account or any other financial account. In carding, for example, carders often gather financial information of credit card holders and use them to open a bank account (usually called bank drop in carding) or credit card accounts.

• Account Fraud

Account takeovers involves using someone’s private information to reset and takeover their accounts. For example, gathering someone’s information and using it to reset their bank account passwords or reporting card as lost and requesting for a new credit card replacement. Private financial information is often called fullz in dark-net sites.