Types of card fraud
Lost and stolen card fraud a card is physically stolen from your wallet or home, or it is lost, and is then used by a criminal, posing as you, to obtain goods and services. Most fraud of this type takes place before you have reported the loss.
This type of card fraud has remained fairly static for the past five years, but a decrease is expected once chip and PIN is fully rolled out in the UK.
Counterfeit card fraud (also known as Skimming) a counterfeit, cloned or skimmed card is one that has been printed, embossed or encoded without permission from the card company, or one that has been validly issued and then altered or recoded.
Most cases of counterfeit fraud involve skimming, a process where the genuine data on a card's magnetic stripe is electronically copied onto another card, without the legitimate cardholder's knowledge.
Skimming can occur at retail outlets particularly bars, restaurants and petrol stations where a corrupt employee puts your card through a device, without your knowledge, that electronically copies the data from your cards magnetic stripe. Sometimes skimming takes place at cash machines where tampering has occurred and a skimming device has been fitted (see below). The information is usually then sold on higher up the criminal ladder where counterfeit cards are made.
Often you will be unaware of such fraud until your statement arrives, showing purchases that you did not make.
Card-not-present (CNP) fraud this includes fraud conducted over the Internet, by telephone, fax and mail order. It is perpetrated when criminals obtain card details through the theft of your card details from discarded receipts or by copying down your details during a transaction. It is now the largest type of fraud in the UK.
The problem in countering this type of fraud lies in the fact that neither the card nor the cardholder is present at a till point in a shop. This means that:
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CNP businesses are unable to check the physical security features of the card to determine if it is genuine
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without a signature or a PIN it is not easy to confirm that the customer is the genuine cardholder
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card issuers cannot guarantee that the information provided in a card-not-present environment has been given by the genuine cardholder.
Mail non-receipt card fraud this type of fraud involves your card being stolen in transit, once it has been sent out to you from your bank or building society. At particular risk for this type of fraud are properties with communal letterboxes, such as flats and student residence halls.
Identity theft on cards this occurs when a criminal uses your fraudulently-obtained personal information to open or access card accounts in your name. There are two types:
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Application fraud stolen or false documents are used to open an account in your name. Criminals steal documents such as your utility bills and bank statements to build up usable information. Alternatively, they may use counterfeit documentation for identification purposes.
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Account take-over by obtaining key personal information criminals are able to take over the running of your account. By pretending to be you the criminal will try to deceive your bank or card company and arrange for payments to be taken from the account. The criminal may also instruct the bank to change various details of the account, such as the address, and then ask for new cards and chequebooks to be issued.
