Credit card fraud can be eliminated

Credit card fraud is a form of identity theft that involves an unauthorized taking of another’s credit card information for the purpose of charging purchases to the account or removing funds from it. Federal law limits cardholders’ liability to $50 in the event of credit card theft, but most banks will waive this amount if the cardholder signs an affidavit explaining the theft.

Credit card fraud schemes generally fall into one of two categories of fraud: application fraud and account takeover.

Application fraud refers to the unauthorized opening of credit card accounts in another person’s name. This may occur if a perpetrator can obtain enough personal information about the victim to completely fill out the credit card application, or is able to create convincing counterfeit documents. Application fraud schemes are serious because a victim may learn about the fraud too late, if ever.

Account takeovers typically involve the criminal hijacking of an existing credit card account, a practice by which a perpetrator obtains enough personal information about a victim to change the account’s billing address.  The perpetrator then subsequently reports the card lost or stolen in order to obtain a new card and make fraudulent purchases with it.

Another common method used to achieve an account takeover is called “skimming.” Skimming schemes occur when businesses’ employees illicitly access to customers’ credit card information. These employees then either sell the information to identity thieves or hijack the victim’s identities themselves.

Technological advances have also created avenues for credit card fraud. With online purchasing now common, perpetrators need no physical card to make an unauthorized purchase. Additionally, electronic databases containing credit card data may be hacked or crash on their own, releasing customers’ credit card information, putting the security of many accounts at risk at once.

Article credit: https://www.law.cornell.edu/wex/credit_card_fraud