Credit card fraud and protection

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Credit card fraud occurs when a person uses one’s credit card or credit card information to make unauthorized purchases or advances without the knowledge of the owner. This can happen by having one’s card or card numbers stolen. There is often an overlap between identity fraud and credit card fraud. This is when people use someone’s personal information to open a new account or make purchases unconsented. This is a form of cyberattack and data breach. Credit card fraud is the most common form of identity fraud.

Types of Credit Card Fraud[edit]

Card Present Fraud[edit]

Card present fraud happens when a physical card is used to commit fraud. This can happen through robbery, pickpocketing, duplicating a card, mail theft, and looking over someone’s shoulder when making purchases. People can also use card skimmers. Card skimmers are machines that read your card numbers. They are located at payment points, most commonly ATMs and gas stations. People can use these numbers to buy things online or they can duplicate the card.

Card-Not-Present Fraud[edit]

Card-not-present fraud is when a person uses credit card information, such as a credit card number, PIN number, accountholder’s name, and CVV code to make unauthorized transactions without a physical card. This can happen by hacking into websites with credit card information, and faking emails or prizes. Some people use account takeover technologies. This is when someone calls a credit card issuer and claims to be the owner of the card. They then change the accounts information like the address and phone number. With this they can avoid fraud detection tools since they can verify accounts and purchases.

As of 2015, the type of credit card fraud has greatly shifted towards card-not-present fraud. This is due to microchip technology. The microchip allows cards to be inserted or scanned without contact. This made it so criminals cannot use credit card skimmers, or clone cards. At the same time, there have been multiple data breaches in credit institutions. Many businesses have sold this information on the black market. With how available credit card information is online paired with the increase in online shopping, card-not-present fraud has increased. There is no current solution to this problem as effective as the microchips were.

How to Protect Against Credit Card Fraud[edit]

Credit card fraud can happen through stealing cards, stealing mail, looking over a shoulder when a person makes a purchase, hacking into websites with credit card information, and faking emails or prizes. As such, there are many different ways to prevent credit card fraud from occurring.

Unless you demonstrated gross negligence by failing to keep your credit card information and pin number safe, the maximum amount of money that a credit card company can charge you if fraudulent transactions are committed on your account is $50. Instead of risking paying that money, use credit card companies that provide zero-dollar liability for unauthorized transactions. Most big credit card companies have this policy, including Visa, MasterCard, and Interac Express. To prevent having to pay more than fifty dollars, keep your information safe. When paying for something in person, shield the credit card machine with your hands or body to prevent people from reading your PIN. Make sure that your PIN is difficult to guess and change it regularly in case it is guessed regardless. Make sure to never tell anybody your PIN, even a family member or partner. Do not write your PIN down or record it anywhere- instead, memorize it.

It is also important to make sure that your physical card is not stolen, as the microchip and credit card number on it can both be used to make unauthorized transactions. Make sure not to carry too many cards at once and keep a list in a secure spot of all the cards you do so that you will notice if they go missing and know what number to call to reach your credit card issuer. You should also keep convenience checks from your credit card issuer in a secure place. Do not let your credit card out of sight when making purchases. When getting rid of an expired card, cut it up into tiny pieces so that your number cannot be used. Lock your mailbox so that new credit cards and credit card statements cannot be stolen from you.

Make sure to protect your information when making purchases or giving information online or over the phone. Only make purchases on secure and trustworthy websites. You will know that a website is trustworthy if the address starts with https or if there is a padlock symbol in the address bar. Never give your credit card information while using unsecure or public Wi-Fi, and always log out and clear your search history after using a public computer. When giving credit card information on the phone, make sure that you are calling someone that you can trust, usually only the number from your credit card issuer on the back of your card. Only give information if you initiated the call, and when you are in a private place where nobody can overhear your information.

In the case of card skimmers, you can tell if one is there by a visual and physical inspection. You can visually tell that there is a card skimmer if the card reader is at an odd angle, or the arrows are covered. This happens because skimmers are often placed on top of the scanners. Gas stations also have security tape or stickers above the cabinet panel. If the tape looks peeled or broken, you should not use that station since it could have been meddled with. If you look inside the card reader and see a thin plastic circuit board inserted, then you have found yourself a card skimmer. For a physical inspection, you can tell If there is a card skimmer by wiggling the card reader. If you can move it easily, then there is a card skimmer inside. Also, if the buttons to an ATM machine are too hard to push, you should use a different one.

How to Tell if Fraud is Being Committed[edit]

Banks have many ways of detecting when fraud has been committed. The bank uses Artificial Intelligence (AI) and Machine Learning (ML). They manage data analysis, fraud alerts, decision-making, predictive modeling, and remediation activity. The AIs and MLs detect anomalies by analyzing internal and external data such as location, purchase history, device ID, IP address, payment amount, and transaction information to see what is normal. When anything outside of the normal happens the card owner and card issuer are notified, and in larger cases, transactions are put on hold until the purchase has been verified. Some examples of anomalies are sudden increases in spending, big ticket purchases like cars and houses, series of rapid transactions, multiple transactions with the same merchant, transactions from an unusual location or foreign country, and transaction from an unusual time. MLs can also track identity fraud patterns and fraud schemes.

To notice if fraud is being committed, you should either check your bank statements often to notice any irregularities or set up transaction alerts. Transaction alerts can notify you of purchases over a certain limit, purchases in different countries, or transactions moving money into a different account. Although transaction alerts are less work than manually checking your account, it is recommended that you do both in case a transaction isn’t flagged by the alerts.

What to do if Credit Card Fraud is Committed[edit]

Even if you only suspect that fraud is being committed, you should still report this immediately. If a card has been lost or stolen, report this to your credit card user and cancel your card. Make sure to get written confirmation from your issuer that the card has been cancelled. If you suspect something when using an ATM machine, you should inform the business that the machine is connected to.

If it has been confirmed that fraud has been committed, you should immediately cancel your card, file a complaint to the police, and report the incident to the Canadian Anti-Fraud Centre. Collect all the important documents about your credit card information and bank account for your police investigation. Record everyone who could have stolen your information- any people or websites that you’ve given your credit card information to and contact your phone company and recently visited websites to inform them that they could have been tampered with. You can also put a fraud alert on your credit card by contacting one of Canada’s credit reporting agencies, Equifax and TransUnion.

Work Cited[edit]

Financial Consumer Agency of Canada. (2018). Credit card fraud -

White, A. (2020, September 3). Here’s how credit card fraud happens and tips to protect yourself. CNBC.

Canada, F. C. A. of. (2017, January 10). Unauthorized credit and debit transactions: know your rights and responsibilities.

Credit card fraud detection: Everything you need to know. (n.d.). Retrieved January 27, 2023, from

Crail, C. (2021, August 20). How To Spot A Credit Card Skimmer. Forbes Advisor.