CREDIT CARD FRAUDS

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CREDIT CARD FRAUDS
DeePaK ShaRmA
LL.M. IPR III Sem
National Law University, Jodhpur
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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.

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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?

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Introduction

• Types of Identity Crime Include
• Identity Theft
• Credit Card / Access Device Fraud (skimming)
• Check Fraud
• False Identification Fraud
• Passport / Visa Fraud

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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.

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Credit Card Fraud Techniques
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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

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Cont

• Merchant Related Frauds
• Merchant Collusion
• Triangulation
• Internet Related Frauds
• Site Cloning
• False Merchant Sites
• Credit Card Generators

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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.

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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.

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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/23
  fraud.htm

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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

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Current 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
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Current State of the Industry
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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

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Impact of Credit Card Frauds

• Impact of Fraud on Banks (Issuer/Acquirer)
• Indirect cost like
• Administrative Cost
• Manpower Cost

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Fraud Prevention Technologies

• Manual Review
• Address Verification System (AVS)
• Card Verification Methods (CVM)
• Negative and Positive Lists
• Payer Authentication
• Lockout Mechanisms
• Fraudulent Merchants

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Recent Developments in Fraud Management

• Simple Rule System
• Risk Scoring Technologies
• Neural Network Technologies
• Biometrics
• Smart Card

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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.

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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.

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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.

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Thank You All