Types of card fraud
We classify card fraud into the following types:
- Card ID theft (‘identity theft’)
- Card-not-present (CNP) fraud
- Counterfeit card fraud
- Lost and stolen card fraud
- Mail non-receipt card fraud
Card ID theft (‘identity theft’)
This occurs when a criminal uses fraudulently obtained personal information to open or access card accounts in someone else’s name. There are two methods of fraud associated with card ID theft:
Application fraud – This involves criminals using stolen or false documents to open an account in someone else’s name.
Account take-over – This involves criminals initially gathering personal information about the intended victim. The criminal will then typically contact the card issuer (masquerade as the genuine cardholder) and arrange for new or replacement cards and PIN reminders to be sent to a different address.
Back to TopCard-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. With this type of fraud neither the card nor the cardholder is physically present at a till point in a shop.
This has become the largest type of card fraud in the UK. However its growth should be seen alongside the tremendous expansion in online and telephone shopping and the increasing numbers of businesses that accept cards remotely. From 2001 to 2008 these fraud losses rose by 243 per cent however over the same time period, the value of online shopping alone increased by 524 per cent .
Back to TopCounterfeit 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 (where a corrupt employee puts your card through a device that electronically copies the data from the magnetic stripe) or at cash machines (where tampering has occurred and a skimming device has been fitted to the ATM).
The vast majority of this fraud is due to criminals stealing card details in the UK to make counterfeit magnetic stripe cards for use in countries yet to upgrade to chip and PIN. Consequently the industry continues to apply pressure on those countries that have yet to complete the implementation of chip and PIN.
Back to TopLost 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. This type of fraud usually happens before you have had the chance to report the card as lost or stolen. The success of chip and PIN means this type of fraud has been falling steadily.
Back to TopMail 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 halls of residence. Chip and PIN has contributed to a steady decline in this type of fraud.
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