Credit Card Frauds

This article talks about various credit card frauds and how can cardholder protect themselves.

· 4 min read
Credit Card Frauds

In this Article:1. Physical Theft or Pickpocketing2. Skimming Card Information3. Phishing and Other related Scams4. Cyber-Attacks or Hacking5. Application Fraud6. Precautions and Safeguard Measures

Credit cards are an attractive payment instrument that allows customers to avail instant short-term credit while making transactions. Credit cards are considered an easier, safer, and more rewarding option than debit cards or other forms of payment. A credit card enhances the purchasing power of its customer and offers benefits like ease of use, cashback, and reward points for future discounts. These benefits of credit cards do not mean that they are not susceptible to fraudulent activities. Credit cards run the risk of being targeted for fraud in several ways. Credit card fraud means any individual using your credit card number and PIN or have stolen your credit card and uses it for financial transactions without your exquisite knowledge. Therefore, any user of credit cards is strictly advised to always follow safeguard measures while using their credit cards to avoid any kind of fraud. Here are some of the most common ways in which credit card frauds are done along with ways in which cardholders can avoid them.

Physical Theft or Pickpocketing

The most common way in which an individual’s credit card can be compromised is through physical theft. When your credit card is misplaced or stolen, there is a high possibility that it will be misused. Credit cardholders should take appropriate precautions to make sure that their card is always kept safely with them. In the event when a credit card is stolen or lost, the cardholder must report it to the issuer of the card as soon as possible.

Skimming Card Information

Skimming refers to the act of stealing credit card details rather than the card itself. Generally, skimming devices are attached to illicit card reader devices or simple point-of-sale devices. These skimming devices steal and stores the card information of an individual while he swipes his card to make payment. Skimming may also be carried through ATM card slots by cloning card information. The main problem with skimming is that the cardholder has no clue of it until he comes across an unknown charge against his credit card. Cardholders must take every possible precaution to prevent skimming of their credit cards.

Phishing is an act of impersonating others for soliciting card details from cardholders personally. The fraudster may impersonate official communication from the bank or insurance agents. They may try to convince you to provide your card details under the pretext of making a transaction on your behalf. They may also ask you to click on false links and enter your card details there or they may want you to share your OTP with them to verify your card or avail rewards. Thus, credit cardholders should never give any information over call or online through false links. They should always confirm that all transactions are taking place through the official and legitimate portal only.

Cyber-Attacks or Hacking

Cyber-attacks and hacking are the most serious and damaging forms of credit card fraud where the hacker hacks into payment servers to steal millions of accounts’ worth of information. In another form of hacking, hackers rely on keystroke logging through malicious software to get credit card details. This is commonly done through cardholders clicking on suspicious links and unknowingly downloading malware into their system. This malware keeps track of every key pressed on the system by you and thus stealing credit card information and more. Therefore, it is crucial for the cardholder to take precautions and security measures to prevent cyber-attacks. They should also be fully aware of the credit card issuer’s cybercrime policies.

Application Fraud

Application fraud is a kind of identity theft. The fraudulent individual imitates a genuine customer by making use of their stolen or forged documents to obtain a credit card in their name. This allows the fraudster to use a valid credit card with an incorrect paper trail. A similar form of fraud involves taking over a valid credit card account by posing as a customer using an untrue paper trail. These frauds can only be detected if thorough background checks are carried out.

Precautions and Safeguard Measures

S. No. Credit Card Fraud Precautions & Safeguard Measures

Physical Theft or Pickpocketing


  • Cardholders should set up alerts for each transaction to avoid unwanted purchases.
  • The cardholder may scratch off the CVV from his card and memorize it to avoid its misuse.
  • In event of a card being stolen or lost, immediately block your card by contacting the card's issuer bank.
  • Register police compliant against the theft to resolve the fraudulent transactions quickly.
  • Check the security on all online sites where your card was used and saved recently.

Skimming Card Information


  • Make sure that your credit card is not taken out of your sight and never swipe it at unverified and suspicious tellers.
  • You should make sure that you receive the receipt of each transaction on your phone.
  • You should always shake the teller device to see if any cloning device is attached to it or not.
  • Always hide the keypad while entering the PIN.

Phishing and Other related Scams


  • Never give any details over a call or on unverified links and sites.
  • Always ensure that all transactions are carried on verified and legitimate portals only.
  • Avoid clicking on suspicious links and verify the URL.
  • Try using your bank’s official portal for any kind of online transaction.
  • Always report to your bank the mobile number from which you received fake and fraudulent calls

Cyber-Attacks or Hacking


  • Avoid clicking on unverified and suspicious links that may download applications or malware from untrustworthy sources.
  • Always use anti-virus software on your system for an added layer of protection.
  • Be aware of your credit card issuer’s cybercrime policies.
5. Application Fraud
  • Always keep records of your documents in a secure environment.
  • Always destroy redundant copies of documents before disposing of them.

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