Credit card fraud is one of the biggest loss concerns in a credit card company. Credit card frauds are usually performed by a group of people either using counterfeit credit cards to cheat unsuspecting merchants or in collaboration with the merchants to cheat the credit card companies. This group of people who performed credit card fraud is known as credit card fraud syndicates.

Types of credit card frauds

There are many types of credit card frauds that have identified by the credit card franchisors and credit card companies. To ease the efforts of fighting fraud, the credit card fraud are classified into various categories by their natures

1. Counterfeit credit cards

Counterfeit credit card transactions are one of the biggest fraud reasons in credit card industry. It make up about 40% of all money lost through credit card frauds. Credit Card Fraud syndicates used various methods to obtain credit card information to create counterfeit cards. The illegally created counterfeit cards will have all the information of the genuine credit cards in their magnetic stripes. One of the known methods used is card skimming whereby information contained on magnetic stripes of cards recorded into chips illegally installed into EDC machines or through wire tapping technology.

2. Lost or stolen credit cards

Lost and stolen credit card fraud formed 20% or the second highest credit card fraud reason. In most cases, the genuine credit cards are stolen from the genuine cardholders in their workplace, gymnasium and unattended vehicles.

3. Mail order or telephone order Fraud

Mail order or telephone order fraud accounts for 10% or is the third highest credit card fraud reason. Usually the credit card fraud syndicates use shady telemarketers and deceptive internet sites to obtain credit card information from the genuine cardholders. In this kind of fraud, the three digits the syndicates need the security number or card verification code (CVC) which is printed at the back of the genuine card to complete the fraud transactions.

4. Non-receipt Fraud

Non-receipt fraud occurs when the credit cards are intercepted by credit card fraud syndicates when they are on the way to the genuine cardholders which are usually by courier or registered mails. This fraud reason accounts for about 7% of the total credit card fraud transactions.

4. Other credit card fraud reasons

The balance 23% of credit card fraud transactions made up of the following fraud reasons not exhaustive:

a. Fraudulent applications
b. No cardholder signatures
c. Unauthorized transactions
d. Invalid transactions