Credit Card Frauds (Coursework Sample)

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Credit Card Frauds
Introduction
Currently, business has changed tremendously due advancement in technology. People no longer need to meet to do business transactions. People now can buy and pay for products or services without going to the distribution. This has been made convenient by the use of credit cards which can be used anywhere in the world. With the increase in globalization, usage of the credit card has also increased (Khyati et al 40). As credit turns out to be the most accepted payment system for both regular and online purchase, several fraud cases has also taken place with the use of the credit cards. Therefore Credit Card Fraud remains one of the major risks to business ventures today (Venkata, Siva, Prasad 1036).
However, to curb the fraud efficiently, it is significant to find out the ways of carrying out a fraud. In light of this, this research seeks to define what Credit Card Fraud is, find out methods or ways in which Credit Card Fraud is carried out and establish statistics about Credit Card Fraud. This will then provide recommendations on how to prevent Credit Card Fraud. In 2012 Khyati, Jyoti & Bhawna defined Credit card fraud as an extensive word for theft carried out by application of a credit card or similar payment method as a falsified source of money in the transaction (40). The reason could be to acquire products or services without paying, or to acquire unauthorized money from someone’s account
Methods or ways of committing Credit Card Fraud
Credit card fraudsters use a number of modus operandi to carry out fraud (Venkata, Siva & Prasad 1043). Fraudsters have become very creative and fast moving in their act. With the change in technology, the technology criminals also changes their ways which they use to do their fraudulent actions. Therefore, methods of credit card are either categorized as traditional frauds or modern frauds (Venkata, Siva & Prasad 1056).
Traditional frauds
Traditional methods Credit Card Fraud are the first ways that were techniques used to commit fraudulent acts. Even though they are still used, fraudsters have devised new ways with regard to changing technology. Traditional credit card frauds include application fraud, intercept fraud and lost and stolen cards methods (Abhinav et al 41). The first type of credit card fraud is the application fraud in which a person falsifies application to obtain a credit card. Application fraud is categorized into two that is the assumed identity and financial fraud.
Venkata, Siva & Prasad claim assumed identity is form of fraud in which a person act as someone else to obtain a credit card to use and access funds from an account whereas, financial fraud is one which a person provides false information concerning their financial situation to get credit (1049). When applications is done by the same user with similar details, then this is duplication while if applications is done from a different person having same details, then this is called identity fraudsters.
Venkata, Siva & Prasad explained application fraud as the "show of identity crime which takes place when application form containing possible and or real details area used. Intercept Fraud is a form of fraud in which a credit card is applied for lawfully, but the fraudster steals it at the post service before it can reach the targeted client" (1061). Illegal application of Lost and Stolen Cards is also a prevalence form of fraud. Lost and stolen credit card fraud is one of the frauds that are difficult to deal with. A credit card is considered lost or stolen if a lawful account holder gets the credit card and misplaces it or somebody steals it for criminal reasons (Abhinav et al 39). This form of fraud is in fundamental nature the easiest means for any fraudster to obtain other person’s credit cards with no of technology. Fraudsters are unlawfully applying the lost and stolen cards will still use them mostly in the coming days since there is no complete solution for this type of fraud.
Modern Credit Card Fraud
Since the technology is changing and offering an ample knowledge and skill to any one including the fraudsters about systems they have changed their ways of conducting theft to a more modernized and sophisticated techniques (Khyati, Jyoti & Bhawna 61 ). Even though, Credit Card companies take have come up with proactive approaches to prevent frauds and scams, fraudsters still find their way to manipulate people. Modern methods for credit card fraud consists of fake cards, doctored cards, skimming, site cloning, triangulation, credit card generators and account takeover among others (Khyati, Jyoti & Bhawna 57).
Venkata, Siva & Prasad describes skimming as the process by which data in a genuine credit card magnetic strip is duplicated then stored on the magnetic stripe of different credit card (1042). This technique gathers information of the credit card which can be used later in criminal activities. Normally an electronic card will be fixed into the transaction reader which gathers information at the time of processing. With the fake card fraud, fraudsters get credit card and private information of client over internet, mail or the phone. Once needed information is acquired fraudsters will copy the genuine credit cards and employ them in fraudulent acts (Venkata, Siva & Prasad 1042). Even though it is still there, fake card fraud is now being overtaken by other modern techniques and turning to be outdated since fake cards need more skill and effort to prepare.
Site cloning is a spoofing method also termed as Phishing. Abhinav et al claim that in this process, the genuine web pages such as web page handling the data associated with credit cards will be duplicated on a different server being managed by fraudsters (43). Abhinav et al thinks that the major intention of fraudsters here is to make clients believe that they are login on a genuine site and during this process their details are gathered for criminal activities (43). Actually this form of fraud method is often conducted by showing an incorrect URL on the browser, which then directs the clients to fake site.
According to Venkata, Siva & Prasad, triangulation is a method in which the fraudsters provide the products at highly discounted rates and also promise the shipping prior to the payment (56). It is in fact look to a client as a genuine sale or auction site however after obtaining the details of the credit card; the fraudster applies these details for another client’s request. Abhinav et al contend that with Credit card generators technique, the fraudsters manufacture the numbers of the credit card with the aid of computer programs (45). This process uses mathematical algorithms and can produce more than one credit card more than one account number.
Statistics about Credit Card Fraud
Online business has undergone a fast growth and significantly enhancing market for the both developed and developing countries. In online business Credit Card has turn into an effective standard for payments. This growth in application of credit card has come with fraudulent practices all over the world. In 2012 Halah reported that Statistics produced by the Internet Crime Complaint Center demonstrate a considerable increase in reporting of the fraud since the inception of the agency in 2000 to its recent figures in 2010. It is estimated that the UK lost up to £535 million through Credit card fraud in 2006 (Halah).
Credit and debit card fraud is on the rise but in some places, like the US, the problem is more common. In 2012 Halah claimed that one recent research established that 27 percent of cardholders in form of prepaid, debit and credit all over the world have undergone fraud in the last five years. The levels of fraud differ across nations but in the US and Mexico is...