Problem

Credit card fraud

Other Names:
Cheque card fraud
Plastic card fraud
Transaction laundering
Nature:

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 businesses process card payments securely and reduce card fraud.

Credit card fraud can be authorised, where the genuine customer themselves processes a 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 cards are more secure than ever, with regulators, card providers and banks taking considerable time and effort to collaborate with investigators worldwide to ensure fraudsters aren't 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 becoming increasingly sophisticated making it harder for fraudsters to steal money.

Incidence:

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
24.04.2019 – 11:08 CEST