7 Types Of Card Payment Frauds

Out of hundreds types of bank Frauds, we have assembled 7 Types of card payment frauds you should beware of and for your safety. Learn the followings be vigilant.

Application Fraud

Application fraud takes place when a person uses stolen or fake documents to open an account in another person’s name. Criminals may steal or fake documents such as utility bills and bank statements to build up a personal profile.

When an account is opened using fake or stolen documents, the fraudster could then withdraw cash or obtain credit in the victim’s name.

Application fraud can also occur using a synthetic identity which is similar to the fake documents mentioned above. A synthetic identity is personal information gathered from many different identities to create one fake identity.

Once the identity and the account is established, the fraudster has a few different options to take advantage of the bank. They can maximize their credit card spending by spending as much money as possible on their new credit card. Many fraudsters will use the new credit card to purchase items that have a high resale value so they can turn it into cash.

Account Takeover

An account takeover refers to the act by which fraudsters will attempt to assume control of a customer’s account (i.e. credit cards, email, banks, SIM card and more). Control at the account level offers high returns for fraudsters. According to Forrester, risk-based authentication (RBA) plays a key role in risk mitigation.

A fraudster uses parts of the victim’s identity such as an email address to gain access to financial accounts. This individual then intercepts communication about the account to keep the victim blind to any threats.

Victims are often the first to detect account takeover when they discover charges on monthly statements they did not authorize or multiple questionable withdrawals.

There has been an increase in the number of account takeovers since the adoption of EMV technology, which makes it more difficult for fraudsters to clone physical credit cards.

Among some of the most common methods by which a fraudster will commit an account, takeover includes proxy-based “checker” one-click apps, brute-force botnet attacks, phishing and malware.

Other methods include dumpster diving to find personal information in discarded mail, and outright buying lists of ‘Fullz’, a slang term for full packages of identifying information sold on the black market.

Once logged in, fraudsters have access to the account and can make purchases and withdraw money from bank accounts. They have access to any information that is tied to the account, they can steal credit card numbers along with social security numbers.

They can change the passwords to prevent the victim from accessing their account. Cybercriminals have the opportunity to open other accounts, utilize rewards and benefits from the account, and sell this information to other hackers.

Social Engineering Fraud

Social engineering fraud can occur when a criminal poses as someone else which results in a voluntary transfer of money or information to the fraudster.

Fraudsters are turning to more sophisticated methods of scamming people and businesses out of money. A common tactic is sending spoof emails impersonating a senior member of staff and trying to deceive employees into transferring money to a fraudulent bank account.

Fraudsters may use a variety of techniques in order to solicit personal information by pretending to be a bank or payment processor. Telephone phishing is the most common social engineering technique to gain the trust of the victim.

Businesses can protect themselves with a dual authorisation process for the transfer of funds that requires authorisation from at least two persons, and a call-back procedure to a previously established contact number, rather than any contact information included with the payment request.

The bank must refund any unauthorised payment; however, they can refuse a refund if they can prove the customer authorised the transaction, or it can prove the customer is at fault because they acted deliberately, or failed to protect details that allowed the transaction.

Skimming Fraud

Skimming is the theft of personal information which has been used in an otherwise normal transaction. The thief can procure a victim’s card number using basic methods such as photocopying receipts or more advanced methods such as using a small electronic device (skimmer) to swipe and store hundreds of victims’ card numbers.

Common scenarios for skimming are taxis, restaurants or bars where the skimmer has possession of the victim’s payment card out of their immediate view.

The thief may also use a small keypad to unobtrusively transcribe the three or four-digit card security code, which is not present on the magnetic strip.

Call centers are another area where skimming can easily occur. Skimming can also occur at merchants when a third-party card-reading device is installed either outside a card-swiping terminal. This device allows a thief to capture a customer’s card information, including their PIN, with each card swipe.

Skimming is difficult for the typical cardholder to detect, but given a large enough sample, it is fairly easy for the card issuer to detect. The issuer collects a list of all the cardholders who have complained about fraudulent transactions, and then uses data mining to discover relationships among them and the merchants they use. Sophisticated algorithms can also search for patterns of fraud.

Merchants must ensure the physical security of their terminals, and penalties for merchants can be severe if they are compromised, ranging from large fines by the issuer to complete exclusion from the system, which can be a death blow to businesses such as restaurants where credit card transactions are the norm.

Instances of skimming have been reported where the perpetrator has put over the card slot of an automated teller machine, a device that reads the magnetic strip as the user unknowingly passes their card through it.

These devices are often used in conjunction with a miniature camera to read the user’s personal identification number at the same time. This method is being used in many parts of the world, including South America, Argentina, and Europe.

Unexpected Repeat Of Billing

Online bill paying or internet purchases utilizing a bank account are a source for repeat billing known as “recurring bank charges”. These are standing orders or banker’s orders from a customer to honour and pay a certain amount every month to the payee.

With E-commerce, especially in the United States, a vendor or payee can receive payment by direct debit through the ACH Network. While many payments or purchases are valid, and the customer has intentions to pay the bill monthly, some are known as Rogue Automatic Payments.

Another type of credit card fraud targets utility customers. Customers receive unsolicited in-person, telephone, or electronic communication from individuals claiming to be representatives of utility companies.

The scammers alert customers that their utilities will be disconnected unless an immediate payment is made, usually involving the use of a reloadable debit card to receive payment. Sometimes the scammers use authentic-looking phone numbers and graphics to deceive victims.

Phishing Fraud

Phishing is one of the most common methods used to steal personal data. It is a type of cyber attack in which the attacker acts as a credible person, institution, or entity and attempts to lure the victim into accepting a message or taking action with the specific request. Often, the target of the attack will receive an email or text message about something they would possibly want or need with the hope of tricking them into opening or downloading the message.

During the COVID-19 pandemic, phishing has been on the rise as our world turned even more virtual. To give perspective, “researchers noted a substantial spike of 667% in COVID-19 phishing attacks in the first months of the pandemic.”

Also, given the significance of health care systems over these recent years health care companies have been the main targets of phishing attacks. These companies have tons of personal data stored that can be extremely valuable to the attacker.

Information Sharing

Information sharing is the transfer or exchange of data between individuals, companies, organizations, and technologies. Advances in technology, the internet, and networks have accelerated the growth of information sharing.

Information is spread and shared in the matter of seconds, and is being accumulated and digested at speeds faster than ever before. People are often not aware of how much sensitive and personal information they share every day.

For example, when purchasing goods online, the buyer’s name, email address, home address, and credit card information are stored and shared with third parties to track them and their future purchases.

Organizations work hard to keep individuals’ personal information secure in their databases, but sometimes hackers are able to compromise its security and gain access to an immense amount of data.

One of the largest data breaches occurred at the discount retailer Target. In this breach about 40 million shopper were affected. In this specific case,

The hackers targeted their point-of-sale system – meaning “they either slipped malware into the terminals where customers swipe their credit cards, or they collected customer data while it was on route from Target to its credit card processors.”

In just one single purchase at the register, masses of personal data is collected which when stolen has major ramifications. The financial market infrastructure and payment system will continue to be a work-in-progress as it constantly is at battle with security hackers.

How Scammers Take Out Money From Credit/Debit Card Details

Most of them use Mtcarder2000 while some use other risky and dangerous alternatives.