OK, so to start off, I know quite a lot about credit card fraud, and I think my information might be useful to others. I also know a bit about identity theft.
There are a few types of credit card fraud, namely: lost, stolen, lost in mail, counterfeit, false applications, and lastly card number misuse.
Lost cards are cards that have been lost, just to state the obvious. Like, if you know you keep your cards in your wallet, and then all of a sudden just one card is missing, you lost your card.
Stolen cards requires the card to be stolen. If your whole wallet goes missing, it was probably stolen by pickpocketing. If you left your wallet somewhere, you lost it. The most cases I had at the bank involving stolen credit cards, were by people who have been robbed, hijacked, smashed and grabbed, or their houses got broken into. Victims of stolen credit cards know that their cards got stolen, and because a credit card is the bank's property, you need to report that it was stolen. It can also be that you have been scammed at an ATM, and the suspects took your card after leaving...Cards that get lost in the mail, is also quite obvious. Worst case scenario is that the transit vehicle got robbed.
Counterfeit cards are
the most interesting cases there are, because to make a counterfeit card there has to be a common point of purchase between a few cards, where the card has been swiped through a skimmer device. So, what happens? The card gets skimmed, then the information from the skimmer device goes onto a computer, the syndicate then print cards (that looks completely different from your card) from different banks, or even international banks, with the suspects name on it. There can be multiple cards printed too. Then, after a card is printed, it gets used. For a lot of purchases. The syndicate tries to commit as much fraud as possible within the least amount of time. So, basically, a counterfeit card is a card with a victim's mag stripe on it, but nothing else.False applications are easy to spot. Its identity theft in other words. False IDs, payslips, etc., get used to apply for a credit card in a fraudulent manner. For the trained eye, its easy to spot a false ID, but to find out if its a false payslip, you need to phone the company that person works for, and if its a false company, its even easier. To start a company, it has to be registered, so, if a company isn't registered, it doesn't exist. If the company does exist, and the applicant works there, and the payslip matches what he/ she actually earns, but that person didn't apply for a credit card, the suspect is most likely working for the HR department of that company, or a different company that was supplied with the victim's information. Well, anyway... When a false application gets approved, its also easy to spot. The credit card usage is what you look at then. Usually, from my experience, there will be a lot of ATM withdrawals, and then a lot of under-floor limit transactions. More about that later.
Card number misuse is when a card number, expiry date, and the CVV/ CVC number gets used to do manual transactions, either over the phone, or over the Internet. It's also extremely easy to spot. A lot of manual transactions will be on the client's statement, and the only way this can happen is if someone writes the information down at a common point of purchase, or someone living with the client, or the client used his/ her credit card on a not-secure website.
OK, so some things all fraudsters do when they have any type of fraudulent credit card is to spend as much as possible in as little as possible time. When its a lost or stolen card, it will usually be a group of fraudsters who split up. They would assign shops and items, except for one person in the group. So, one person buys electronics, one person buys food, one person buys clothes, one person buys furniture, etc. and the last one is the runner. He runs with the credit card from the one place to the other and gives it to the person at the till to pay. The sad thing is, the law...
If and when these persons get arrested, all the goods they bought has to be confiscated as evidence, and goods that expire are to be photographed and can be destroyed. Meaning, if they buy food, you can not keep food in an evidence safe, so the food can be eaten or given away. After the court proceedings, however, all the goods have to be given back to the fraudsters. Because its theirs. The goods were not stolen, because to steal something is to take it without permission. The goods that are bought with fraudulent credit cards are obtained in a fraudulent manner, but it has been obtained with permission of the merchants. The fraudster picks a TV that he/she wants, and the merchant accepts to give it to them if they receive payment. Merchants give fraudsters goods, sometimes they even wrap it nicely or even deliver it to their homes. Nice, isn't it?
So, how do we stop this? It's easy... Merchants have a signed agreement with the bank. They are supposed to compare the signed slips signature with the signature at the back of the credit card, and also ask for an ID to compare with the name that is embossed on the credit card. And if the credit card holder doesn't like it? TOUGH! The credit card that is used by the client is still the property of the bank, and the client also has a signed agreement with the bank. Contracts, contracts, contracts...
OK, then the last issue for today. Your wallet got lost and you stopped your (the banks... Hahaha!) card, and after you stopped it, transactions came through. How is this possible you ask? Easy, once again... Each merchant has a floor limit on their POS (point of sales) machine. So, let's say Sally owns a flower shop, her floor limit is R50. Every transaction over R50 is going to require authorization by the bank, every transaction below R50 is going to go through automatically, unless it is listed on the hot card list. A card is valid until it expires. That's why a stolen card can be used. So, the banks run listings daily of stopped cards that are being used. If a transaction was declined, the bank won't phone you, if it went through, they will phone to open a fraud case, and the money that was spent will be payed back to you.
Don't get mad at the bank if the transactions go through! It's not their fault. Not all stopped cards can be listed on the hot card file, there isn't enough space. And not all cards that have been stopped get used afterwards. It's cheaper to pay the client back than to buy more space on the system. Luckily, there are chip cards now, that make it a hell of a lot more difficult to commit fraud.
Hope I made you smarter...
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