Table of Contents
ToggleCredit cards have become a staple in our financial lives with benefits from payment flexibility and cash withdrawal to rewards and travel benefits. But did you know that financial fraud in India has been on the rise, with credit card fraud being one of the most prevalent?
According to a report by the Reserve Bank of India, during the fiscal year ending March 2024, cyber fraud in India grew by 14.57 billion rupees ($175 million) in a year. This makes it crucial for cardholders to be aware of the risks and protective measures available.
In this guide, we aim to help you get a better understanding of what credit card fraud is, the types of credit card fraud, and some of the most effective credit card fraud detection techniques. Let’s read.
Credit card fraud is when someone hacks your credit card information like the passcode, card number, etc, and uses these details to make purchases or transactions without your consent. Often, physical theft of the card can lead to credit card fraud.
Several techniques and technologies can also be used to hack credit cards; criminals can digitally acquire card details required to make a transaction. An individual’s personal information and card details may be compromised as the result of a data breach or cyberattack. Therefore, knowledge about credit card fraud detection is critical for all credit card users.
Credit card frauds fall under two main categories – card-present fraud and card-not-present fraud. Let’s read about both in detail.
This is a typical case of stealing where someone has your credit card and decides to use it at a physical outlet. As the name says, the card is present, which means that the card is either stolen or duplicated.
Lost or Stolen Cards
This is a theft where a criminal gets hold of the physical card and uses it until the card is either frozen or has hit the credit limit. In this case, the card may have been stolen or lost. In case you decide to stop using a credit card, make sure to cut or cancel it before discarding it.
Credit Card Application Fraud
This type of credit card fraud is a growing concern. It is the result of your personal information or documents being stolen to get a credit card under your name. Moreover, this credit card fraud may go unnoticed until you apply for credit or check your credit report. So, always make sure to shred the copies of your IDs and other necessary documents before discarding them.
Hacking
This is the type of stealing where hackers use advanced technology and methods to hack your credit card information or the bank database. This may also involve data leaks from websites or payment gateways. So, always be careful when sharing your card details on the web.
In a card-not-present fraud, the criminal uses card details like card number, CVV, and the account holder’s name to make transactions online.
Credit Card Skimming
In this method of stealing, the fraudster uses a skimmer at the payment point to read or record details like card numbers and PINs. This is quite common at frequented payment points like ATMs and petrol stations. This type of hacking is extremely sophisticated and is very hard to notice.
Phishing
This is a form of credit card fraud where hackers send emails or texts with links to fraudulent websites to get cardholders to share their personal details. The fraudsters use look-alike websites to coax users into sharing their information.
Account Takeover
In an account takeover, a fraudster may pretend to be the legitimate cardholder and change information like phone number and password to get illegal access to the account. This will allow them to authenticate transactions through a simple OTP or one-time password. In India, with the increasing use of digital banking, account takeover frauds are becoming more common.
Credit card fraud detection is the process of identifying fraud before it causes much harm to you both financially and emotionally. It includes the use of tools, methods, practices, and policies by financial organisations to combat this problem.
With the advancements in technology, we are witnessing a wide use of artificial intelligence (AI) and machine learning technology in the credit card fraud detection process. Methods like predictive analysis and AI-based decision-making can be a huge aid through the medium of fraud alerts and remediation activities.
Several credit card fraud detection methods may be employed to detect credit card fraud. For example, a cardholder can safeguard themselves with the use of transaction monitoring, which is a basic exercise of keeping track of daily transactions to be able to notice any unwanted activity and act timely.
Similarly, a credit card company may use behavioural analytics to understand your spending pattern or spending behaviour. They may use AI to identify large or suspicious transactions and alert you immediately. Rule-based fraud detection may be a sub-category where the actual cardholder is informed about a transaction higher than the set limit.
Here are some steps you can take to protect yourself from credit card fraud:
Looking for the Best secure credit card?
Get Edge CSB Bank RuPay Credit Card on Jupiter protected by PCI DSS
In today’s digital age, credit card fraud is a serious concern, especially in a country like India which is in its growing phase. This is the reason it is very crucial for cardholders to have all the necessary information to safeguard themselves from such frauds. You can always come back here and read about credit card fraud detection. Stay safe, stay aware!
Credit card fraud can be committed in several ways, including stealing physical cards, hacking online accounts, getting card details through phishing, and skimming at ATMs or point-of-sale terminals.
Credit card fraud is a form of cybercrime that involves the unauthorised use of someone’s credit card or card information to make transactions.
In cybercrime, credit card fraud typically involves hacking into systems to steal card information or using social engineering techniques like phishing to obtain card details.
Yes, credit card fraud can often be traced, especially when detected early. Banks and financial institutions use advanced fraud detection methods to track and trace fraudulent transactions.
In most cases, if the fraud is reported promptly, the cardholder is not held liable for the fraudulent charges. The financial institution usually covers the cost, provided the cardholder takes reasonable precautions to prevent fraud.