CREDIT CARD CREDIT CARD FRAUDSFRAUDS

Objectives

• Identify and describe examples of Credit Card frauds.

• List ways to protect yourself from Credit Card fraud in card present and card not present scenario.

• Be aware with upcoming technologies in the concerning field.

Outlines of Presentation

• Introduction• Credit Card Fraud Techniques• Credit Card Fraud Case Studies• Current State of the Industry• Impact of Credit Card Frauds• Fraud Prevention Technologies• Recent Developments in Fraud Management• Some Suggestions - How to protect Credit Card

against fraud or theft?

Introduction

Types of Identity Crime Include:

• Identity Theft

• Credit CardCredit Card / Access Device Fraud (skimming)

• Check Fraud

• False Identification Fraud

• Passport / Visa Fraud

Cont…

• Definition of Credit Card Frauds• Credit card frauds are committed in the

following ways:– An act of criminal deception (mislead with

intent) by use of unauthorized account and/or personal information

– Illegal or unauthorized use of account for personal gain

– Misrepresentation of account information to obtain goods and/or services.

Credit Card Fraud Techniques

Credit Card Fraud

Techniques

Traditional Card Related

Fraud Techniques

Merchant Related Fraud

Techniques

Internet Related Fraud

Techniques

Credit Card Fraud Techniques…

• Card Related Frauds– Application Fraud– Lost/Stolen Cards– Account Takeover– Fake and Counterfeit Cards

• Erasing the Magnetic Strip• Creating a Fake Card• Altering Card Details• Skimming • White Plastic

Cont…

Merchant Related Frauds– Merchant Collusion– Triangulation

Internet Related Frauds– Site Cloning– False Merchant Sites– Credit Card Generators

1. Amit Tiwari swindle online credit card company - Credit Card Fraud Case

• CC Avenue verifies and validates credit cards of buyers for over a thousand e-commerce Web sites. It conducts checks like IP mapping, zip code mapping and reverse lookup of telephone numbers.

• Amit, who was offered by CC Avenue for Web designing services on www.mafiaz.com.

Cont…

• Amit processed several transactions, worth Rs 311,508, via CC Avenue (from

November 2002 to February 2003) with credit card details of consumers that he found on the Net.

• (In April 2003) Avenue began receiving charge-backs from the credit card holders, who denied using mafiaz.com's Web designing service.

Cont…

• On complaint of company, Amit trapped by mumbai police and later he confessed his offence.

• He's been charged for cheating under Section 420 but not in IT Act.

Source: http://www.rediff.com/netguide/2003/aug/23fraud.htm

2. BPO/Credit Card Fraud Case

• Case registered against a call centre employee in 2002

• He had misused the credit card details of one of the clients

• Gifted one SONY TV to himself• The accused was arrested • Admitted his guilt• Convicted by the Court

Current State of the IndustryCurrent State of the Industry

• Credit card frauds are taking place over the internet 15 times higher than face-to-face transactions

Source: Celent Communications, January 2003

Method %

Lost of Stolen Card 48%

Identity Theft 15%

Skimming (cloning) 14%

Counterfeit Card 12%

Mail Intercept Fraud 6%

Other 5%

Current State of the Industry…Current State of the Industry…

Impact of Credit Card Frauds

• Impact of Fraud on Cardholders

• Impact of Fraud on Merchants– Cost of goods sold– Shipping cost– Card association fees– Merchant band fees– Administrative cost– Loss of Reputation

Impact of Credit Card Frauds…

• Impact of Fraud on Banks (Issuer/Acquirer)– Indirect cost: like

• Administrative Cost• Manpower Cost

Fraud Prevention Technologies

• Manual Review

• Address Verification System (AVS)

• Card Verification Methods (CVM)

• Negative and Positive Lists

• Payer Authentication

• Lockout Mechanisms

• Fraudulent Merchants

Recent Developments in Fraud Management

• Simple Rule System

• Risk Scoring Technologies

• Neural Network Technologies

• Biometrics

• Smart Card

How to protect Credit Card against fraud or theft?

• Sign your card- as soon as you receive it! • When you use your card at an ATM, enter

your PIN in such a way that no one can easily memorize your keystrokes.

• Don't leave your receipt behind at the ATM. Your PIN and account number from a discarded receipt could make you vulnerable to Credit Card fraud. Also, don't throw out your Credit Card statement, receipts or carbons without first shredding them!

• Never give your Credit Card number over the telephone unless you initiated the call.

Cont…

• Even when you place the call to a legitimate merchant, never give your Card number out over a cordless phone. One common scam is when someone calls you "back" right after you place an order, claims to be from the merchant and tells you that there was a problem with your Card number -- would you mind giving it to them again? The best thing to do is to ask them to read you the number they have - and then change any incorrect numbers.

• Ignore any Credit Card offer that requires you to spend money up-front or fails to disclose the identity of the Card issuer.

Cont…

• Make certain you get your Card back after you make a purchase (one habit to observe is to leave your wallet open in your hand until you have the Card back). Also, make sure that you personally rip up any voided or cancelled sales slips.

• Always keep a list of your Credit Cards, Credit Card numbers and toll-free numbers in case your Card is stolen or lost.

• Check your monthly statement to make certain all charges are your own, and immediately notify the Card issuer of any errors or unauthorized charges.

Thank You AllThank You All