Monthly Archives: October 2011

How Merchants Can Reduce Credit Card Fraud?

In this series we are going to cover one of the biggest problems all over the world. Credit card fraud.

Many people do not know what credit card fraud is, credit card fraud would be defined as some one who uses someone else’s credit card information. It is also an act which is punishable. However credit card fraud seems to be very difficult to do, I must tell you that it is not the case.

Well you might have heard about “mail non-receipt fraud” this happens when an old credit card is lost and you request for the new one and you are supposed to receive via mail which you never receive. One big reason why the bank sends you an inactive credit card and then you have to make a phone call to activate your credit card or else it would not work. Unfortunately they are few banks who does not follow this and send the credit cards that are activated.

Then you might have heard about “charge back fraud” here the legal card holder uses his card to do shopping or purchases any kind of services. Then the statement comes and the card holder calls up bank stating that he never used that service or may be he did not give any kind of authorization on his credit card transaction.

Now there is another kind of credit card fraud called “skimming” where the merchant or an employee makes a copy of the credit card details before processing the payment. This copy is then sold to professionals in black market who makes duplicate illegal copies of these cards. However skimming has now become less problem for the people after the introduction of CVV and CVS codes.
When the ATM machines were first introduced, skimming at ATMs was practiced largely in numbers which was problematic. The skimmer what they did was they placed a skimmer device somewhere in the ATM machine set up illegally that reads the magnetic stripe attached to the card. This illegal technology is used by the help of many devices which monitors the keypad of the ATM by attaching a fake fascia over the original keypad. However this is not at practice as earlier.

The most common type of fraud is the online credit card fraud today, with all the transaction that people do every day. Now how the online credit card fraud is done? When you use the credit card for shopping on line the hackers monitor the person’s entry into the merchant’s system and then steal the credit card information and it is done in such a manner that one doesn’t even come to know. Another way to get a person’s credit card information on line is to send an official looking email telling the person that they have to update the credit card info. The mails are sent in bogus link to go to where the info is collected and uses them for the scammer’s purpose.