How Do Credit Card Frauds Happen And How Can You Protect Yourself From It?

According to a report, 39% of resident Indians in 2020 fell victim to identity theft in one form or another. The data uncovers a severe scenario surrounding online deception and cybercrime, and the immediate attention required to tackle financial frauds in this new era of financial transactions.

Credit card fraud in India is one type of identity theft, where an imposter steals an individual’s credentials like credit card number and security codes. He/she then uses the information to fund transactions. It is essential to know the types of frauds run on credit cards for a better understanding of how they are concluded. Below is thus a brief idea regarding the various fraud types and their mechanisms.

Types of credit card frauds and means to stay protected

In the faceless era of financial transactions, credit cards are now more susceptible to fraudulent charges for their increasing use across emerging platforms. Without proper awareness regarding the modus operandi of different types of credit card fraud and the laws against them, individuals can easily fall prey to scammers and imposters.

Apart from being cautious against such scams, individuals can opt for Wallet Care plan provided by Bajaj Finserv under Pocket Insurance & Subscriptions to alleviate the financial liability arising if they fall prey to such a fraud.

Mentioned below are some major types of credit card frauds and the ways to prevent them.

  • Cyberattacks

Cyberattack is a collective term denoted for different methods used by fraudsters to hijack sensitive information from either a payment server or directly from an individual. Hackers can also gain unauthorised access to a person or organisation’s device and then steal financial details or any other sensitive data.

Often dubbed ‘carding’, under this mechanism, hackers can use a stolen card or the information of a card so obtained to purchase store-branded gift cards or goods to resell them for cash. There is little that an individual can do against cyberattacks except being extremely cautious while using devices connected to the internet.

It goes without saying that one should also report to the financial institution and file an FIR on the first instant of noticing unauthorised credit card payments. It will allow the card issuer to block the card and prevent further losses.

To remain protected against incurring losses during cyberattacks, individuals can opt for a fraudulent charges cover. Here, the insurer will reimburse unauthorised charges on your covered credit cards such as in-store and online purchases, and ATM withdrawals up to 7 days after the first report of such activities.

  • Theft and robbery

One of the easiest ways that fraudsters can gain access to an individual’s credit card information is by obtaining it in physical form. When visiting crowded places, make sure to keep an eye on pickpockets and store your cards securely.

In case you are travelling abroad with replacement cards, make sure to keep them locked up in safe cases, and the originals in a secure place. To further limit the financial liabilities, individuals can opt for a handbag assure plan, which comes with benefits such as quick card blocking and emergency cash assistance when travelling.

  • Phishing

Phishing attacks refer to misleading the customer into revealing sensitive information such as account details and username-password combos. The technique can either be used online or via spoofing a call (called vishing).

Imposters generally create a fake website and then send phishing emails to innocent customers posing as legitimate businesses. Such a phoney website usually displays a login form where you need to enter your banking information. Else, the website installs malware without the user’s knowledge.

These fraudsters can also impersonate an employee from your financier, and ask for details such as credit card number, security number, and the OTP sent to your registered mobile number.

Never disclose such sensitive details to anybody even if they sound legitimate. Immediately report the number and file an FIR at your nearest police station if you notice unusual online credit card payment.

  • Skimming

According to data published by the Ministry of State for Electronics and IT, in FY20, more than 50,000 cases of fraudulent credit and debit card use were reported in the country.  ATM skimming was identified as one primary technique to dupe users, wherein fraudsters cloned the magnetic chip on the plastic card using a skimming device.

Apart from a card reader (skimmer), ATM skimming also sometimes involves using a pinhole camera to capture the PIN code. Credit card fraud via skimming can be easily prevented if special attention is taken before inserting the card in an ATM’s card reader and covering the keypad while entering the PIN code.

Individuals should also take special care when making credit card bill payment online, as such transactions made via unsecured channels can also lead to data loss. Make payments only after verifying the legitimacy of the domain and on secure networks to avoid falling prey to such frauds.