Credit card fraud

Other Names:
Cheque card fraud
Plastic card fraud
Transaction laundering

Credit card fraud is an inclusive term for fraud committed using a payment card, such as a credit card or debit card. The purpose may be to obtain goods or services or to make payment to another account, which is controlled by a criminal. The Payment Card Industry Data Security Standard (PCI DSS) is the data security standard created to help financial institutions process card payments securely and reduce card fraud.

Credit card fraud can be authorised, where the genuine customer themselves processes payment to another account which is controlled by a criminal, or unauthorised, where the account holder does not provide authorisation for the payment to proceed and the transaction is carried out by a third party. In 2018, unauthorised financial fraud losses across payment cards and remote banking totalled £844.8 million in the United Kingdom. Whereas banks and card companies prevented £1.66 billion in unauthorised fraud in 2018. That is the equivalent to £2 in every £3 of attempted fraud being stopped.

Credit card fraud can occur when unauthorized users gain access to an individual's credit card information in order to make purchases, other transactions, or open new accounts. A few examples of credit card fraud include account takeover fraud, new account fraud, cloned cards, and cards-not-present schemes. This unauthorized access occurs through phishing, skimming, and information sharing by a user, oftentimes unknowingly. However, this type of fraud can be detected through means of artificial intelligence and machine learning as well as prevented by issuers, institutions, and individual cardholders. According to a 2021 annual report, about 50% of all Americans have experienced a fraudulent charge on their credit or debit cards, and more than one in three credit or debit card holders have experienced fraud multiple times. This amounts to 127 million people in the US that have been victims of credit card theft at least once.

Regulators, card providers and banks take considerable time and effort to collaborate with investigators worldwide with the goal of ensuring fraudsters are not successful. Cardholders' money is usually protected from scammers with regulations that make the card provider and bank accountable. The technology and security measures behind credit cards are continuously advancing, adding barriers for fraudsters attempting to steal money.


In the UK, the annual cost of credit card fraud was estimated to have risen from £50 million in 1989 to £165 million in 1993. In 1992, two million cards were list or stolen in the UK. In the USA in 1993, credit card fraud was expected to cost US$1.5 billion where an estimated 10,000 cards are stolen from 5,000 people every day. Other ways which criminals have used to obtain card information are filming users at teller machines and requiring people to swipe their credit cards in order to participate in a sales event. Fraudsters also make use of telephone, and now the Internet, offering services and asking for card numbers or ordering goods with someone else's name and number. A more recent form of credit card fraud is transaction laundering whereby fraudulent representatives inform businessmen that they need to have their card sales processed by another credit card merchant for tax or other reasons, promising to pay a fee for the service. These firms specialize in supply goods that are either sub-standard or non-existent, leaving the original merchant liable for the cost.

Related Problems:
Compulsory identity cards
Problem Type:
E: Emanations of other problems
Date of last update
04.10.2020 – 22:48 CEST