The article gives an overview of credit card fraud, various credit card fraud methods, and ways to prevent it.With
the advent of commerce, fraudsters have been exploiting
businesses for their own financial gain. And the problem
is only getting worse. The same technological advances
that have been a boon for the banking industry have
also been advantageous to criminals, making fraud relatively
easy to commit and difficult to detect. From cheque
fraud to credit card fraud, to identity theft and beyond,
fraud is an equal opportunity crime, and every business
is vulnerable. This is especially true of banks, which
trade money in bytes rather than papers. Credit card
fraud is one of the biggest threats to business nowadays.
Combating credit card fraud is the most important issue
for banks in the present era. However, it is something
that cannot be totally eliminated but rather can be
managed. Each week, new and more creative scams are
appearing with fraudsters accessing thousands of card
account details through techniques such as phishing,
hacking, skimming, Website spoofing, credit card trading
and Trojan proxies. Banks and online merchants face
the tough challenge of keeping one step ahead of these
criminal techniques as online spending continues to
grow. Fraud is ever changing, shifting its focus as
new and new preventive measures are introduced to combat
it.
As
far as the rate of fraud in the credit card industry
is concerned, it has been taking place right from the
time the cards were introduced. However, the techniques
of fraud are becoming more and more sophisticated day-by-day.
The Graph in the next page shows that in the early 1970s
the credit card frauds were 18% in the category of card
present. With the advancement of technology in 1980s,
the frauds were to the tune of 16% of total expenditure
in Mail Order Telephone Order (MOTO)* segment. But today's
online frauds in the category of Card Not Present (CNP)
are more common due to emergence of e-commerce.
Credit
Card Fraud can be defined as: When an individual uses
another individual's credit card for personal reasons,
while the owner of the card and the card issuer are
not aware of the fact that the card is being used. Further
the individual using the card has no connection with
the card holder or the issuer and has no intention of
either contacting the owner of the card or making repayments
for the purchases made. |
