Types of Fraud
Understanding these risks is crucial in protecting yourself and your financial assets from falling victim to fraudulent activities.
Types of Card Fraud
1) Family Fraud
Family fraud occurs when a family member or someone close to the cardholder uses the card or account information without permission. It can be intentional or accidental but is often challenging to address due to personal relationships.
Example: A sibling uses a cardholder’s card to make online purchases without their consent.
2) Skimming
Skimming involves capturing card information through devices installed on ATMs, gas pumps, or point-of-sale terminals. Fraudsters copy the card’s magnetic stripe data and use it to create counterfeit cards.
Example: A skimmer device installed at an ATM reads the card’s data, and a hidden camera captures the PIN. The stolen data is then used to withdraw cash.
3)Phishing
Phishing is a type of social engineering fraud where fraudsters trick individuals into revealing sensitive information, such as card numbers, PINs, or passwords, by pretending to be a legitimate institution.
Example: An email claiming to be from a bank asks the recipient to verify their account by entering personal information into a fake website.
4) Lost or Stolen Card Fraud
Occurs when a physical card is lost or stolen and then used by a fraudster to make unauthorized transactions.
Example: A thief steals a wallet and uses the card to make in-store purchases before it’s reported lost.
5) Account Takeover Fraud
Fraudsters gain access to a cardholder’s account by stealing login credentials, then change account information and conduct transactions as if they were the legitimate owner. They may also access stored payment methods in digital wallets, such as Amazon, and make purchases without needing the physical card.
Example: A hacker uses stolen login details to reset passwords and reroutes account notifications to their email, taking full control of the account. They then use stored cards in the wallet to make unauthorized purchases.
6) Counterfeit Card Fraud
Fraudsters clone a card by copying the magnetic stripe or chip data and create a fake card to make unauthorized transactions.
Example:A skimmer copies data from a card, and a duplicate card is manufactured to withdraw money from ATMs.
7) Card Testing Fraud
Fraudsters use small, low-value transactions to test whether stolen card information is valid before making larger purchases.
Example: A fraudster uses a card number to make a $1 online purchase to confirm it works before attempting a larger fraudulent transaction.