Tips to Prevent Credit Card Misuse

TYPES OF CREDIT CARD FRAUDS According to industry estimates, the credit card fraud rate in India is currently close to 25%. Credit card frauds can broadly be classified into three categories: traditional card-related frauds, merchant-related frauds and internet frauds.

Card-related frauds include an application fraud, whereby a person uses someone else’s personal information illegally, or provides false information about his or her financial status.

Some other examples of card-related frauds are creating fake or counterfeit cards by altering card details by re-embossing or re-coding them; or skimming — a process by which genuine data on a card’s magnetic strip is electronically copied on to another.

An example of merchant-related frauds is merchant collusion, where an employee acquires personal information and passes this information to fraudsters.

In the past few years, internet-related frauds have grown rapidly. In more developed markets, online frauds comprise almost 40% of total credit card frauds. In India, the numbers are low, but with credit card usage and access to the internet increasing, we need to be prepared for the risk. Online credit card frauds usually occur when a fraudster gets access to credit card details that are provided on an unsafe site.

Phishing is another online fraud technique that has emerged over the past few years. Phishing attacks occur when a consumer receives a request from a seemingly trustworthy source — for instance, an e-mail created to look like official communication from a reputed bank, asking the consumer to visit a particular site and submit his or her credit card details for official purposes. Unsuspecting consumers do so and are eventually duped of thousands of dollars this way.