The Truth of Credit

Credit card fraud is a $850 million dollar business in the U.S.  It seems for every credit card protection that is created, there is a smarter thief out there that will exploit it. There are four main techniques that thieves use:

Carding

Carding is a term used for a process used to verify if a stolen card is still good. The thief presents the card information on a website that has real-time transaction-processing. If the card is processed successfully, the thief knows that the card is still good.  The thief does not need to purchase an actual product; a Web site subscription or charitable donation would be sufficient. The purchase is usually for a small amount, both to avoid reaching the card’s credit limit and also to avoid attracting the bank’s attention. A website known to be susceptible to carding is known as a “cardable website”.

 Account Takeover

Account takeover involves a thief trying to take over another person’s account, first by gathering information about the victim, then contacting the bank or credit issuer while pretending to be the cardholder and asking for mail to be redirected to a new address. The criminal then reports the card lost and asks for a replacement to be sent. The replacement card is then used fraudulently.

**Note: There is a new practice of asking the cardholder to send a copy of one of their physical statements to insure this the request was made by the correct person before a new card is sent**

Skimming

Skimming is the theft of credit card information used in an otherwise legitimate transaction. It is typically an “inside job” by a dishonest employee of a legitimate merchant and can be as simple as photocopying receipts. Common scenarios for skimming are restaurants or bars where the skimmer has possession of the victim’s credit card out of their immediate view. The skimmer will typically use a small keypad to transcribe the 3 or 4 digit Card Security Code which is not present on the magnetic strip. This is a tough one to detect and probably the most sophisticated form of fraud there is.

Mail/Internet Order Fraud

The mail and the Internet are major routes for fraud against merchants who sell and ship products, as well Internet merchants who provide online services. The industry term for catalog order and similar transactions is “Card Not Present” (CNP), meaning that the card is not physically available for the merchant to inspect. The merchant must rely on the holder (or someone pretending to be the holder) to present the information on the card by indirect means, whether by mail, telephone or over the Internet when the cardholder is not present at the point of sale. This is why so many consumers are afraid to use the Internet as commerce. Despite this, the Internet is much safer than it used to be and for the most part you are just as safe shopping on the Internet as you are Macy’s.

The TRUTH is that you or someone you know may become a victim of credit card fraud. The best way to fight this is to constantly monitor you credit and watch your monthly statements. Please note that the banks are very serious when it comes to this kind of crime but because of the low dollar figures most criminals do go unpunished. I have spoken with numerous people who have had this happen and it can be difficult to repair your credit if you don’t catch it early.  Always review your statements! 

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