Credit Card Fraud

Topics: Credit card fraud, Credit card, Debit card Pages: 7 (1919 words) Published: January 2, 2013
Running Head: Credit Card Fraud

Impact of Credit Card Fraud

Card Credit Fraud
Thesis Statement: Credit card fraud is an inclusive term for larceny and deception committed using a credit card or any similar payment mechanism as a fraudulent source of funds in a transaction. The purpose may be to attain goods without paying, or to achieve illegal resources from an account. Credit card fraud is also an appendage to identity theft. According to the Federal Trade Commission, while identity theft had been holding steady for the last few years, it saw a 21 percent increase in 2008..( "Consumer Sentinel Network Data Book: January - December 2008" (PDF). Federal Trade Commission February 26, 2009.)

The costs of card fraud in 2006 were 7 cents per 100 dollars worth of transactions (7 basis points).( "Credit Card Issuer Fraud Management, Report Highlights, December 2008")Mercator Advisory Group. 2008.) Due to the high volume of dealings this translates to billions of dollars. In 2006, fraud in the United Kingdom alone was estimated at £535 million, (“Plastic card fraud goes back up". BBC. March 12, 2008.) Or US$750–830 million at prevailing 2006 exchange rates. (USDGBP=X: Basic Chart for USD to GBP — Yahoo! Finance)

I. Origins
II. Stolen cards
III. Compromised account
A. Card not present transaction
B. Identity theft
a. Application fraud
b. Account takeover
C. Skimming
D. Carding
E. BIN attack
F. Tele phishing
IV. Fraudulent charge-back schemes

I.                  Origins 
The fraud begins mostly in two ways, either by the theft of the corporeal card or by the negotiation of data related with the account including all the information. The compromise can occur by many common routes and one of the ways which’s typically used is warning the card holder, until the account is ultimately used for fraud. Here’s an example where a store clerk is copying sales receipts so he can use them later. Using credit card on internet promptly has made database security a minor slip pertaining to be costly, ("Court filings double estimate of TJX breach"2007.) Card holders can directly report about their stolen cards, but unfortunately, a compromised account can be stockpiled by a thief for weeks or even months before counterfeit use, which make it really hard to identify the source of the compromise. II.               Stolen Cards

Stolen credit cards remain functional until the holder acquaints that his card has been lost or stolen. To punctual reporting, most issuers have free 24- hour telephone numbers; still the thief has possibilities to make unlimited acquisitions until the card’s cancelled. As well as a thief could gradually buy thousands of dollars in possessions or other services until the card holder realize that his credit’s with the wrong person. (Adsit, Dennis (February 21, 2011). "Error-proofing strategies for managing call center fraud".  

There’s only one common security measure on all cards which’s a signature panel that’s unfortunately easy to forge.  The lucky people are the ones whom their credit cards include the holder's picture on the card itself. Some merchants ask for the ID so they identify the identity of the purchaser and make sure that the credit’s not stolen. But unfortunately, in some authorities, it is illegal for merchants to ask for card holder identification.  

In Europe, cards are mostly operational with an EMV chip which requires a 4 digit PIN to be entered by the card holder terminal before the payment which will be authorized. However, they don’t ask for a PIN while using online transactions, and often they don’t require for transactions using the magnetic strip.   In some States like California it’s illegal to ask for the customer’s ZIP code, where the state’s 1971 law proscribes shop keepers from demanding the holder’s "personal identification information’ as a condition of accepting the card payments. California Supreme...
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