How often do you think about the importance of online payment security every time you make a transaction? Electronic payment has attracted vast attention in recent times. In that respect, the use of credit cards increased extensively over the last few years. But this also gave rise to credit card fraud. Today, payment fraud is one of the principal ethical issues in the credit card industry. Now payment operators and cardholders are searching for efficient means of tackling credit card fraud.
In this blog post, we will explain what credit card fraud is, the types of credit card fraud, and how you can protect yourself from credit card fraud, and how you can reduce your risk of credit card scam.
What is credit card fraud?
The use of digital money is obviously a common scenario in all countries around the world. Digital money pertains to the means of payment in electronic form, which we can also call ‘electronic currency’ or even ‘cyber cash’. This money is intangible, and is only accessible via computers or other digital devices, as they only exist in digital form. Like any standard currency, we use digital money to purchase goods and services. People use it for shopping, for paying the bills online, and for any other online transaction.
But, with a substantial increase in the number of credit card holders, the cases of credit card fraud have also been on the rise. In the first place, fraud is a crime that the global finance industry is committed to combatting. Fraud is any activity that aims to gain services, goods or money by unethical means.
According to the Federal Trade Commission’s ‘Consumer Sentinel Network, Data Book 2019’ report, people reported losing more than 1.9 billion US dollars to fraud in 2019. Moreover, this fact translates into an increase of 293 million US dollars over what was reported in 2018. Credit card fraud takes place almost every day in different ways. This is the nightmare of every cardholder, so they must learn how to prevent credit card fraud.
How does it happen?
To tackle the credit card fraud effectively, it’s crucial to understand the very mechanism of fraud and how credit card fraud happens. There are numerous techniques in which fraudsters execute a credit card fraud. For example, account takeover fraud happens when a perpetrator illicitly obtains access to a user’s personal information, like financial accounts. Once they manage to get this access to a user’s online banking account, they send funds to their own account. Unfortunately, the bad consequences are endless, so it can be costly for cardholders.
Another method that fraudsters use is creating counterfeit cards. The bad news is that fraudsters are constantly coming up with new methods to create counterfeit cards. This is the practice of illegally copying the magnetic stripe of a legitimate card, and using this data to create a fake card. Although we call them fake, they contain the information of real cards, and these cards are counterfeit cards.
How does credit card fraud affect businesses?
As a matter of fact, businesses undergo digital transformation. They integrate digital technology into all areas of a business, which fundamentally change the ways the businesses operate. Although digital transformation may look different for every business, they understand the need for technology to differentiate themselves from the competition. Establishing trust through digitalization without disruption is increasingly the goal. Businesses need to offer an online experience that instils confidence. Unfortunately, there are several barriers to accomplishing this goal.
Businesses are aware of the prevalence of fraudulent actions in the marketplace. But it turns out that business executives aren’t so confident about their ability to protect their company as well as their customers from fraud. Experian in his ‘2018 Global Fraud and Identity Report’ outlined that 54% of businesses were only ‘somewhat confident’ in their ability to identify fraudulent activity compared to only 40% who were very confident.
We can assess the impact of fraud on businesses from 3 perspectives. The most obvious way in which fraud can affect a business is financial loss. Secondly, a company that is subjected to fraud is normally painted in black for investors and also business partners. It means that fraud incidents lead to significant reputational consequences on the impacted organization. Additionally, credit card fraud can result in distorted markets where perpetrators gain a competitive edge and push legitimate business out.
The costs of fraud are significant and extensive. We believe that it is important to calculate the costs. In that way, the importance of investing in precautionary actions can be highlighted.
What can you do to protect yourself from credit card fraud?
Here are Swiss Cyber Forum’s three smart tips on how you can increase your credit card security.
- Avoid websites that don’t use proper encryption techniques. First, look at the URL of the website, and see if it begins with “https” instead of “http”. This means that an SSL certificate is already installed on a web server. This certificate encrypts all the data that is being transmitted. Don’t forget that an insecure website can spread malware or steal your personal data.
- Try to use only bank-operated ATMs. Fraudsters use hidden electronics to steal your credit card data. In that way, they record the user’s record your PIN number, then get to the cash in his/her account. It is advisable to use bank-owned ATMs when in need of cash.
- Check your bank statements regularly and reconcile them with the transactions you made. If you see any unfamiliar or suspicious charges, notify your card issuer immediately. Although your bank union will have several security measures to protect your information, you also should be proactive in protecting your personal information. As soon as you inform your ban issuer, they will conduct an investigation on your accounts.
Credit card fraud can be disturbing. But we highlighted 3 precautions you can take to lower the chance of being the victim of credit card fraud.
The convenience of electronic payment made credit cards popular among all users around the world. However, the internet has also produced an increased probability of fraud in credit card transactions. Simply put, as card business transactions increase in volume, so too do fraudulent actions.
The good news is that with proper cybersecurity measures such as monitoring all transaction records and enabling fraud alert program (if there is any), you can protect yourself from credit card fraud.
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