Almost everyone owns a credit card these days. These small, plastic cards allow you to purchase goods or services on credit and are your utmost companion, and the transaction processes involved are reliable. However, fraud and theft have found their way here as well. The purpose of credit card fraud is to attain goods without purchasing, or to obtain unauthorized funds from an account via theft.
Card fraud is brought into action either with the theft, itself, physically of the card or with the compromise of information related to the cardholder or the account. Because of the frequent, daily use of credit cards, security lapses and compromises have become an easy thing. Cons and criminals can easily commit credit card fraud and get away with it. Scot-free.
Your credit card is indeed convenient. But using it without taking precautions can lead to financial loss. There are certain risks involved in using credit cards without implementing basic precaution and in over-usage.
Read also: 5 Top Banks Offering Credit Cards in Pakistan
Credit Card Risks
1. You might end up borrowing and accumulating more money than you can afford to pay back.
2. You might damage your credit record if you are incapable of paying back your loans frequently.
3. You’ll find yourself being asked to pay additional interest.
4. Because of your history, you won’t be granted loans and or credit in the future.
5. And of course, there is credit card fraud.
6 Credit Card Frauds and Ways of Avoiding Them:
Credit Card frauds have more than one face. Six of the most common and known credit card frauds are listed and described below.
Read also: How to Enjoy your Credit Card without Going into Debt
1. Application Fraud.
Application fraud is said to have occurred when other people apply for credit or a new credit card in someone else’s name. This will begin, usually, by supporting documents being stolen. These documents are later used to further the application. Criminals and cons are known to then be involved in forgery and they provide fake contact numbers and other made-up details to last longer.
You can safeguard yourself from this fraud. There are certain measures that have been devised specifically for this theft. By presenting your original documentation to your bank, agency et cetera, you have a much higher chance of securing your money and steering clear of becoming a victim of this identity theft.
2. Electronic Credit Card Imprints.
When somebody steals information that is placed on the magnetic strip found on credit cards, that is called electronic credit card imprinting. Which is later used to encode a phony/fake card or to make illegal transacts.
This theft can be prevented by getting a manual imprint of your card. Some security softwares like CenPOS, et cetera are a much better alternative.
3. Card-Not-Present (CNP) Fraud.
If somehow a criminal knows your card’s expiration date and account number, they have the power of committing what’s called a card-not-present fraud against you. To simplify this, the person in knowledge of the above-mentioned information can use your credit card without actually being in physical possession of it.
Keep an eye out for frequent small payments on your name. CNP is usually not much seen, as there are a wide number of combinations to verify the code. Which will take a lot of time to crack—longer than the other credit card thefts.
4. Lost/Stolen Card Fraud.
This is the most usual type of credit card frauds. Criminals will either steal your card from you, or procure it after you’ve accidentally misplaced or lost it. They will then use it to make payments. Withdrawing cash from machines is a no-no, because only you know the pin. However, online payments can be made.
Call in and have your card cancelled immediately after it is either lost or stolen. Your cash stays safe this way.
5. Manufactured/Phony Cards.
Manufacturing a fake or phony card is a rather arduous process, but many criminals have been reported resorting to it. If a criminal is skilled enough to duplicate everything a real card is made of, they will do so and then use fake names to fool shopkeepers and buy products. By the time law enforcement will be on to their little scheme, they will be long gone with their “purchases.”
If cashiers look closely enough, they can tell whether a card is fake or real. To be able to protect themselves from this sort of fraud, people who are supposed to encounter credit card related transactions must be taught how to tell between fake and real.
6. Card ID Fraud.
Criminals can use a person’s credit card information to take hold of it or to make for themselves a new credit card. Victims of card ID find it hard to rid themselves of their criminals and to recover. Probably because it may take a long while before they have even realized they are in a card ID fraud, and even longer to find the culprit.
General protective measures ought to keep you safe from this one. Don’t let your card details be known. Carry it with you and retrieve it only when needed. Keep a record of your credit card sum and make sure you know the basic procedure of reporting credit thefts.
Read also: 5 Tips To Save Money Using Your Credit Card!
There are other ways criminals and credit card cons can make use of your credit card information. Make sure you have credit cards secure when traveling and carrying them with you. Implementing basic protective measures against such theft does a lot you will begrudgingly admit. It could mean the difference between loss and stability. Make sure you learn to recognize the aforementioned credit card frauds, and possibly more, and can save yourself and others from hours of frustration, considerably lost sums of money, and even imprisonment.
Awareness is always the first key level of protection. Yet as fast as one becomes mildly aware the perpetrators are rapidly onto the next level of deception. The greatest lack in the country is financial literacy education. Amazingly, we as a nation have the highest level of financial illiteracy in the world. Thus the vast majority of our population is subject to financial victimization of all forms due to a simple lack of financial literacy.