Unfortunately, we all need to be mindful when it comes to our personal details these days. It seems that we cannot switch on the news or look on the Internet without seeing a new story about a data breach or identity theft that has occurred.
In order to protect yourself effectively, you need to educate yourself. The trouble is that there are many different types of fraud and cybercriminals are getting more and more sophisticated all of the time.
With that being said, in this blog post, we are going to reveal everything you need to know about the main types of card fraud, including everything from CNP fraud to false application fraud. So, let’s take a look:
1. Card Not Present (CNP) Fraud
There is only one place to begin when it comes to card fraud, and this is with Card Not Present (CNP) fraud. This is a payment scam or fraudulent payment that takes place without the correct card owner’s consent.
CNP happens when a fraudster attains some type of payment information, for instance, the person’s name, address, credit card number, or the three-digit security number on the back of the card, and then they use this information to make purchases online.
Some of the most common techniques and forms of CNP fraud include:
- Skimming and testing
- Telephone transactions
- Mobile sales
- Online sales
Today, fraudsters are able to buy ‘fullz’ with ease. This is where an entire stolen profile is uncovered via phishing attacks or data breaches, with fraudsters able to buy them on the dark web.
As the merchant is not able to physically confirm whether or not the person using the card is who they claim to be, it is vital to accumulate as much data as possible about your customers so that risk can be mitigated.
CNP fraud prevention works by gathering user information, assessing the behavior of your users, and highlighting any suspicious CNP transaction data. You should enrich this information with social media look-up, device fingerprinting, and IP address analysis.
2. False application fraud
Next, we have false application fraud, which is when a person uses their own name to make an application for a financial product, such as a credit card, yet they utilize counterfeit documents or false information during their application.
For example, someone may use fake payslips during their credit card application to indicate they earn more money than they do in reality.
Similarly, misuse of facility occurs when a person opens an account with the intention of utilizing it for fraudulent reasons, for example, when someone takes out a credit card yet they do not have any intention of making repayments.
These two kinds of false application fraud can be conducted by individuals who have stolen someone else’s identity or by individuals under their own name. It can be harder to spot this type of activity, as the victim could have no idea that a new account has been opened in their name.
Often, people only find out that they have been a victim of this type of fraud when they go to apply for credit and they are shocked to see that their account has been rejected because of fraudulent activity associated with them.
3. Card never arrived fraud
We live in such a digital world nowadays that we have a tendency to assume that all types of fraud are carried out online via the likes of ransomware, malware, phishing attacks, and so on. However, you still need to be mindful of the data-stealing that happens physically, as this can be just as effective and the consequences can be just as severe.
Card never arrived breaches are a prime example of this. Whenever you submit an application for a credit card or debit card today, nine times out of 10 that card is going to be sent to your home via the mail.
This type of fraud is used to describe a situation whereby this debit or credit card does not reach you because it has been stolen en route. This could happen if a thief simply steals this from your letterbox or if it is intercepted at some point throughout the journey.
To reduce the chances of being a victim of this type of fraud you are advised to keep a check on your mailbox regularly and to use a lockable mailbox so that outsiders are not able to get access to your letters.
4. Lost and stolen card fraud
This type of fraud is pretty self-explanatory. If you have lost your card or someone has stolen it, they can use your card until they are stopped. Pickpockets have long been a problem all over the world, especially in busy cities and on public commuter transport.
In the past, losing a credit card or debit card would not cause instant fear because the user may require a signature in order to use it. However, as we have moved to more convenient spending habits, such as online shopping, it is so much easier to make credit and debit card payments.
In terms of online shopping, all you need is the details that are literally on the credit or debit card in order to make a purchase. So, if your card falls into the hands of the wrong person, they could start making online purchases straight away.
You also need to consider the rise of contactless payments. The newest debit and credit cards enable you to make smaller purchases without needing to enter your pin. Instead, you simply hold your card close to the payment terminal and it will deduct the funds from your account. So, if someone has stolen your credit or debit card, they could easily go on a physical shopping spree, and this could be a lot harder to trace.
The bad news does not end there either, as the person who has stolen your credit card could sell your details on the dark web or could use this information to gain access to your online bank account.
After all, they now have access to information such as your long card number, the expiry date, your security code, your name, your bank account, and your sort code. With all of this knowledge, they could gain access to your account with relative ease by answering some security questions.
The good news is that banks and credit card companies are doing everything in their power to protect their customers. As soon as you have noticed that your card is missing, you should be able to freeze use. You can then order a new card or you can unfreeze your card if you realize that it was a false alarm and it is actually in your bag!
5. Skimming and counterfeit card fraud
Last but not least, we have skimming, which tends to happen at retail outlets, petrol stations, restaurants, bars, and such like. It can happen at a cash machine that has been fitted with a skimming device illegally or when a staff member takes your card away to process a payment. The data that has been stolen is then used to generate counterfeit cards.
Skimming is rife, and because of this, we are seeing new technology being developed all of the time. For example, some bank ATMs are fitted with jitter technology, which basically makes your card shake a little bit when it enters the card reader slot, meaning the magnetic strip cannot be read should there by any skimming device.
Despite this, it is imperative to make sure you are always careful about the ATM you use. Take a look at the machine to make sure that there does not seem to be anything out of the ordinary, i.e. a device that has been fitted that does not look like part of the machine. This is especially important if you are overseas.
Furthermore, if you are at a restaurant or a bar, do not let anyone take your card away in order to make a payment. Instead, you should always insist that the PoS terminal is brought to you. Most staff members today have portable PoS systems, so there is no reason for them to take your card. If they claim that they only have a fixed terminal, you should accompany them when they are putting your payment through. After all, it is better to be safe than sorry, right?
Do not take risks when it comes to protecting your identity
So there you have it: an insight into the main types of card fraud we are seeing being used by cybercriminals today. We hope that this has helped you to get a better understanding of the main strategies being used.
However, it is also important to recognize that cybercriminals are constantly looking for new ways to breach systems, so you can never afford to remain stagnant when it comes to protecting your identity.