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Credit Card Fraud - Part I
in this series we are going to cover one of the biggest problems all over the world. credit card fraud.
for those who may not exactly know what credit card fraud is, a simple definition. credit card fraud is the act of making a purchase using someone elses credit card information. sounds like something that should be difficult to do. unfortunately, its not.
there are many types of credit card fraud, the most common well cover in this article.
first there is what is called mail non-receipt fraud which is when a new or replacement card is sent by the bank and never received by the person it was supposed to go to. this has been mostly combated by the banks sending out inactive credit cards where the person has to make a phone call in order to activate the card. otherwise it cant be used. unfortunately there are some banks that do not do this and still send out cards that are already activated.
then there is what is called chargeback fraud where a legitimate cardholder uses the card to purchase goods or services. then when the statement comes they call the credit card company and claim they never received the item or service or that they never authorized the transaction.
another type of credit card fraud is called skimming where an employee or merchant makes a second copy of the persons credit card details before processing the payment. this copy is then sold on the black market to professionals who clone illegal copies of these cards. fortunately, skimming has become less of a problem since the introduction of cvv and cvs codes. these are not encoded on the card strip but are physically written on the back of the card. this is a required three digit code to finalize all transactions. without this code even a cloned credit card will not work.
skimming at atms has also been a problem. what the illegally set up atm machine does is place a skimmer device somewhere in the machine that reads the magnetic strip attached to the card. this is used together with various devices that monitor the keypad of the atm by attaching a fake fascia over the original keypad. fortunately, this is not as common today as it was years ago when atm machines were relatively new.
then of course there is online credit card fraud which is the most common type of credit card fraud today with all the transactions that people do each day. this type of fraud gets a little complicated but simply stated, when a person uses their credit card online, hackers monitor the persons entry into the merchants system and essentially steal the credit card information without the person having any idea this is happening. another way to get a persons credit card info online is to send an official looking email telling the person that they have to update their credit card info. they are sent a bogus link to go to where the info is collected and used for whatever purpose the scammer wants, whether to sell the info or use it to make purchases himself.
in the next article in this series well go into credit card fraud into more depth.
michael russell
your independent guide to credit cards
article source: http://ezinearticles.com/?expert=michael_russell
Credit Card Fraud - Part II
in this issue of our series on credit card fraud were going to dig a little deeper into some facts and figures that will most certainly raise the hair on the back of your neck.
in plain dollars and cents, a single credit card fraud can, and has, accounted for about forty-million dollars in just one year alone. that translates to about 900,000 victims in 22 countries. thats a lot of people and a lot of money and thats just one fraud. for those wondering, this particular fraud involved adult web sites, but credit card fraud was going on long before the internet came to be.
what is new is the ability to run this fraud across the entire world with just a mouse click and attack thousands of people in a very short period of time. the internet has simply given a very old scam new legs. it has brutally exposed the security problems with our credit card system and takes advantage of these leaks to the max.
the particular fraud mentioned up top was perpetrated by a company called j k publications. if you want to read about the details of this fraud you can do so in the august 1999 issue of scientific american. needless to say, it is some juicy reading.
so just where does the money go when a company or merchant or even individual perpetrates a credit card fraud? well, if the fraud goes undetected in most cases the money goes to the merchant himself with the middle man, if there is one, usually getting paid a cut, if for no other reason than to make sure he keeps his mouth shut. in some cases the money goes to the merchant and the bank. yes, there are some crooked banks out there, especially overseas in countries that will remain nameless for fear of gun toting gangsters being sent over here to settle a score.
if, however, the fraud is detected then the money does get repaid to the victim but in most cases less than the under $50 amount that the banks have to pay. in other words, the victim doesnt completely come away from this unscathed. many european banks wont pay up at all. as for the merchant account, they dont want to suffer losses, so many times they will simply just close up and reopen under a new name.
because the system itself is weak, the thieves themselves are rarely caught, and then when they are, they rarely get punished to the extent that they should. the problem with the system is that is was designed for buying physical goods with the card holder being physically present. with internet transactions the cardholder no longer has to sign for the transaction, at least not in the usual way, and this makes it way too easy to cheat the system.
in our next article in this series well look more into the problems of the system and what victims of fraud can do to help protect themselves, or for that matter prevent themselves from being the victim of credit card fraud.
michael russell
your independent guide to credit cards
article source: http://ezinearticles.com/?expert=michael_russell
Credit Card Fraud - Part III
in this article were going to discuss what to do if you are the victim of credit card fraud or if you want to do what you can to minimize the risk of being such a victim.
one of the best things you can do to prevent credit card fraud is switch to cards like the american express blue card. what american express does it centralize its transaction verification and merchant account tracking. this makes their cards much more fraud resistant. also, because visa and mastercard have the majority of the credit card market, this makes american express a less likely target. in most cases of american express fraud, which are relatively rare, the customers are reimbursed immediately and without question. also, american express has much more friendly customer service procedures for handling fraud problems. in 2002 they added what are called amex private payments, which are one time use disposable credit card numbers. this virtually makes fraud impossible unless the card is lost or stolen. and then it is simply a matter of reporting it in time.
another thing you can do is go to a firm that handles refund requests. most of these are appointed by federal agencies that investigate fraud. these firms specialize in this type of litigation and will be most qualified to handle your complaint as quickly and as cost effectively as possible. the majority of fraud complaints handled by these firms rule in favor of the plaintiff.
unfortunately there are times when your only recourse is to cancel your credit card and change banks. usually what happens when a card number is stolen is that the issuing bank is unable to block continuing transactions. in this case canceling the card wont be enough because banks usually carry over charges from one card to another. so in order to completely clean up your account you may have to change banks as well. this will all depend on how good your bank is at blocking charges, especially if your card has been widely circulated.
another thing you can do is phone the ftc hotline number for credit card fraud. they have been set up to deal with this problem specifically. there is also a form that you can fill out online to determine if you are eligible for a refund.
a problem that you may run into is that some banks will refuse to reimburse charges that are over 60 days old. if this happens your only recourse is to report the bank to the federal authorities and let them handle the problem.
when looking for a new bank, or for that matter a first bank to get your first card, look for one that has a good anti fraud record. this information is available online and through several agencies of the ftc.
use as few credit cards as possible. the fewer cards you use the less chance of being victim of fraud. also try to use your cards as little as possible.
check your credit card statements carefully to make sure that there are no charges that dont belong there and request credit reports so that you can see if there has been any unusual activity on your account.
by doing the above things you will greatly minimize the risk of being the victim of fraud and have the best chance of being refunded should a fraud occur.
michael russell
your independent guide to credit cards
article source: http://ezinearticles.com/?expert=michael_russell
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