Criminals Easily Commit Credit Card Identity Theft

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The Faces of Credit Card Frauds

The term credit card fraud refers to fraudulent actions involving not just credit cards but also debit cards. The perpetrator may use the card to purchase goods or services or transfer money into another account the criminal controls. To reduce the instances of credit card frauds, they created the Payment Card Industry Data Security. This data security standard has the sole purpose of helping banks and other financial institutions process credit and debit card payments securely thus reducing the amount of fraud.

There are two classifications of credit card fraud: authorized and unauthorized. In an allowed transaction, the actual card owner sends a payment to an account the criminal controls while an unauthorized transaction refers to a transaction in which the account holder did not allow to reduce the transaction, but the criminal himself or another third party handled the transaction. In 2018 unauthorized fraudulent transactions created financial losses of over $24 billion worldwide.

The most common fraud today involves instances where the card is not present. This can usually take place without the account holder even being aware until some time later. With the internet being such a large source of financial transactions. Data breaches have created costly security lapses; sometimes, millions of accounts have been involved in the data breach.

Some of the more common types of credit card identity theft include:

• Application fraud when a criminal uses fake or stolen information to open an account in someone else’s name (can also link to identity theft).
• Taking over another person’s account by assuming control of accounts that do not belong to the person in question.
• Social engineering fraud occurs when a scammer poses as someone else in order to incur a voluntary money transfer or receive personal information about another person through fraudulent methods. The criminal will then access the person’s bank account, credit cards, or use the personal information to get access to those accounts.

• When an account holder uses his card in what he believes to be a routine transaction, skimming occurs, getting personal information. A device that swipes and records the credit card numbers of many victims can accomplish this. Another method involves the scammer making a copy of the account numbers on a card when it is out of the immediate view of the account holder. This can occur frequently in places such as restaurants where the card often taken out of the sight of the customer to another location in the building for processing.
• Unexpected repetitive billing is another method that is easy for customers but can be an open invitation to scammers. Another method is when criminal pose as representatives of utility companies and tell customers they must pay immediately to avoid termination of service. Typically, a reloadable debit card is used to load the funds.

Notable identity theft Cases

A breach of data occurred at TIX Companies between July 2005 and January 2007. The breach exposed information from 45.6 million credit cards. The same person who believe to be the instigator of this attack, was indicted in August 2009 for the theft of information from 130 million credit and debit cards at Heartland Payment Systems that affected four retailers.

Adobe Systems suffered a hack in 2012 that compromised information from 40 million accounts. The information that was exposed included the names of customers, account numbers and expiration dates from encrypted payment methods, and order information.

The Statistics

Four Russians and a Ukrainian were indicted in July 2013 in New Jersey. A minimum of 160 million losses of credit cards and over $300 million in monetary losses resulted. The hack affected sever large companies in the U.S. and Europe including Citigroup, Nasdaq OMX Group, PNC Financial Servies Group, Visa licensee Visa Jordan, Carrefour, J.C. Penny, and JetBlue Airways.

 Target Corporation experienced a breach between November 27, 2013, and December 15, 2013 in which data from approximately 40 million credit cards was compromised. The information exposed included names, expiration dates, account numbers, and CVV codes.

Neiman-Marcus experienced a breach from July 16 to October 30, 2013 in which approximately 110 million they compromised sets of payment data.

They compromised the payment systems at Home Depot on September 8, 2014. During the breach, hackers compromised 56 million customer credit card account numbers.

A coordinated attack on May 15, 2016, resulted in 1600 South African credit cards being compromised at 1400 convenience stores in Tokyo. The total loss was $12.7 million and only took three hours. A group of around 100 committed the theft.

Credit Card Identity Theft Statistics

While there are likely to be many more statistics on credit card frauds, we have chosen ten of the most important ones of which consumers need to be aware against Identity Theft Protection. It is also important to note, according to FTC, credit card theft is a part of identity theft.

1. Over 390,000 cases of credit card fraud were reported in 2020 according to the Federal Trade Commission (FTC).
2. The FTC reported credit card fraud was the most common type of identity theft in 2020.
3. In 2020 thirty-four percent of all fraud reports involved a monetary loss (FTC).
4. FTC reported the 4.7 million fraud reports in 2020 was higher than the number reported in 2019.
5. COVID-19 and federal stimulus payments resulted in 143,992 fraud reports as of July 2020 (FTC).
6. Higher median losses occurred in 2020 among those 60 years old or older than among any other age group (FTC).
7. New accounts experienced a 48 percent increase in 2020 over 2019 (FTC).
8. Delaware, Florida, Georgia, Maryland, and Nevada were the states with the highest per capita rates of reported credit card fraud (FTC).
9. The FTC stated consumers reported losses because of fraud over $3.3 billion in 2020. This was $1.5 billion more than what it reported in 2019.
10. In 2019 33.57 percent of all credit card losses because of fraud occurred in the United States (Nilson Report).