Here Are the Most Common Credit Card Frauds And How to Prevent Them

December 10, 2021 Mutual Fund

A credit card has become one of the most preferred payment option for individuals, as it opens a new short-term line of credit and increases the purchasing power of the cardholder. It is safer, easier and a rewarding option when compared to payment via debit card or cash. With alluring rewards, cash-back points, and discounts offered by credit cards, the wise use of these cards can help you save a substantial amount of money every month. The use of credit cards have increased during the pandemic as most people nowadays prefer online shopping in order to avoid crowding at public hotspots. However, with the increased use of credit cards, fraudsters and scammers have been targeting credit cards more than ever. Knowing the possible credit card frauds and how you can prevent them will help you securely use your credit cards.

How do fraudsters make Credit Card fraud?

The fraudsters can make credit card fraud by gaining access to your sensitive information. There could be several ways the fraudsters gain access to your sensitive information, such as your personal details, credit card number, CVV, One Time Password (OTP), etc. due to which your credit card can easily fall prey to unauthorised activity. Here are some common ways fraudsters and scammers make credit card frauds:

• Physical access to the credit card (lost or stolen credit card)

• Skimming your credit card (through Point of Sales (POS) devices)

• Phishing

• Malware Attack

• Stealing your email details

• Stealing your documents

• Looking over your shoulder at checkout

• Physical access to the credit card:

  The most common way to gain access to your credit card information is by stealing the card. Similarly, when your credit card is stolen or misplaced, there are high chances that it can be misused.. Even if you have lost your credit card, you can still prevent the fraud.

  How can you prevent it?

  – Set a transaction alert for all your online and offline credit card purchases. This way you will immediately come to know when an unauthorised transaction takes place by using your card.

  – For most transactions to proceed, you will require either a 4-digit Personal Identification Number (PIN) or an OTP. It is advisable to never share your PIN or OTP with anyone.

  – All the credit cards have a CVV (a 3 digit number) mentioned at the back of the card. A few transactions that might not require a PIN or OTP, will never proceed without a CVV. Therefore, it is advisable to memorise your CVV and scratch it off the credit card.

  – As soon as you realise that your credit card is lost or stolen, you should contact the customer care service of the credit card issuer and get the credit card blocked permanently. You can also block your credit card through internet banking or mobile banking. Blocking the credit card ensures you have no liability against any future fraud.

  – If an unauthorised transaction has already taken place, you must immediately contact the customer care service desk of the credit card issuer and inform about the same. It is also advisable to register a complaint with the nearest police station as it will help in resolving the issue faster.

  – You should remove the stolen or lost credit card details immediately from all the websites where you have saved your credit card information for faster checkout.

• Skimming your Credit Card:

  Your credit card details can be stolen with the small skimming devices attached to the POS machines. So, by the time you swipe your card through a POS machine, the skimming machine scans the credit card details and stores them. While the skimming machine steals the credit card details, the hidden camera nearby captures the PIN you enter to complete the transaction, which then can be used by fraudsters. This kind of skimming usually takes place at petrol pumps or other crowded areas, where customers are always in a hurry. Such devices can also be used at ATMs.

  How can you prevent it?

  – Before swiping your credit card, always check for the suspicious devices attached to the POS.

  – Cover the keypad with your other hand while typing the PIN at ATM or POS. So that the chances of misusing the stolen data will be reduced as the scammer will not be able to use the credit card details without the PIN.

  – Use the 'Tap and Pay' option to avoid the risk of skimming at crowded places. If the facility is not enabled on your credit card, you can simply login into your internet banking or mobile banking and enable the service. This will allow you to pay up to Rs 5,000 with a simple tap, without swiping your credit card.

• Phishing:

  Phishing is nothing but impersonating a legitimate company and asking the victim to follow a certain link that looks exactly like an authentic website. You might have seen a couple of TV commercials running to spread awareness about phishing. It is the act of soliciting card information personally, where the fraudsters call the victim and pretend to be from a reputed company or a bank. The fraudsters give a believable reason, such as the credit card details need to be updated or there is suspicious activity on your credit card, etc. They ask the victim to follow a certain link and the victim lands on a web page that looks like an authentic website of the company he already knows about. The victim will be asked to enter his/her credit card details. The caller will then ask for an OTP and it is used to make a fraudulent transaction. The caller may also ask the answers to the security questions the victim chose while creating their internet banking or credit card login. This data can be used to gain access to ones online credit card account.

  How can you prevent it?

  – The bank or credit card issuer or any other legitimate company will never ask for your confidential information, such as credit card number, CVV, security questions (name of your childhood friend, mother's maiden name, your father's native place, etc) or OTP. Therefore, you should never provide such details to anyone over an unsolicited call.

  – You should not click on any link that requires immediate action and does not come from an official source.

  – Verify the URL before entering any sensitive information. It is advisable to type the company website or URL in the search box by yourself, instead of clicking on the link.

  – Immediately complaint about such phishing attempts with caller details to the police station so that such events could be avoided in the future.

• Malware Attacks:

  Malware is a short form of malicious software, which the hackers or fraudsters install on the victim's device without the victim noticing it. Such malicious software can track your activity and steal the sensitive data you stored or type on your device. So, when you type your credit card number, expiry date, CVV, etc., the hacker can read the information and steal it.

  How can you prevent it?

  – You should always use licensed software.

  – Use a virtual keyboard whenever you need to type sensitive information, such as credit card details, internet banking passwords, etc. as the malware cannot read the data you type on a virtual keyboard.

  – Use authentic antivirus software and remember to do periodic scans.

  – Do not click on the links that come from an untrusted source.

  – Do not provide any personal details or financial details to the websites that do not have a secured connection. To find whether the website has a secured connection, check if the URL starts with https. Remember that the letter 'S' in the word https stands for security.

• Stealing your Email Address:

  Stealing an email address to make frauds is another common practice of fraudsters. They hack your email address where you receive all your bank statements, notifications, etc. It becomes very easy to get access to all the required information once they have access to a victim's email. Another disadvantage is that the hacker can stop your transaction notification. Upon doing so, you will not realise when the unauthorised transactions take place unless you have mobile notifications turned on.

  How can you prevent it?

  – Avoid online payments or logging into any accounts with passwords using public Wi-Fi or public computers. If you have to use public Wi-Fi or computers, use Virtual Private Network (VPN) for secured transactions.

  – Always keep strong passwords. Use combinations of alphabets and numbers, lower case and upper-case alphabets, special characters, etc.

  – Do not use your personal details like name, date of birth, etc. to create your passwords.

  – To create passwords, try to use phrases instead of words.

  – Try to keep different passwords for different accounts.

  – Keep changing your passwords after every 3 to 6 months.

  – Do not share your personal identification Numbers (PINs), passwords, CVV, etc. with anyone.

  – Never leave your devices unlocked when not in use.

  – Clear the browsing history every time you use a shared device.

• Stealing Your Documents:

  By stealing the documents of the victim like identity proof, address proof, income documents, etc., fraudsters can apply for a new credit card and use it for fraudulent transactions, without the victim's knowledge. The victim realises about this credit card when the dues get piled up and the credit card issuer contacts the victim for the repayment. This kind of fraud can be detected after a detailed investigation.

  How can you prevent it?

  – You should keep extra copies of your important documents in a secured place.

  – If you have any unneeded copies of the important documents, then it is advisable to properly shred them, instead of unnecessarily keeping them.

  – While submitting the copies of your documents for account opening, loan application, new SIM card, etc., always mention the reason for which it is submitted along with the date.

  – If your application is rejected, ask for the documents in return to ensure they will not be used for any fraudulent activity.

• Looking Over Your Shoulder at Checkout:

  People looking over your shoulder while you are watching or typing something on your phone is very common, especially in crowded places like public transports where there is hardly any distance between you and the person sitting next to you. While not all people peek into your phone intending to make a fraud, many of them can misuse the information. Your credit card information can be stolen by a person sitting next to you or standing behind you by looking over your shoulder while you make an online payment for a pair of jeans or coffee beans!

  How can you prevent it?

  – You should never make an online payment through a credit/debit card or internet banking when you are in a crowded area or a public place or even if a known person is trying to peek into your phone.

To Conclude:

With the increased use of digital banking and plastic cards during the pandemic, online and credit card related frauds have also increased. To avoid being a victim of credit card fraud, you should take the necessary precautions as discussed above in the article. Moreover, it is not advisable to share your sensitive information with anyone. You can also avail of credit card insurance for extra protection against any credit card related frauds.

This article first appeared on PersonalFN here