Credit card fraud is a broad term for theft committed using a credit card or any similar payment mechanism as a fraudulent source of funds in a transaction. The crime of credit fraud is often committed to obtain goods without paying, or to obtain unauthorized funds from a financial account. Credit card fraud is also an accessory to identity theft. The cost of credit card fraud reaches into billions of dollars annually. The fraud begins either with the theft of the actual credit card, or the abuse of stolen data associated with the credit account, including the card account number or other information that would routinely be available to a salesperson during a legitimate transaction. The compromise can occur by many common routes and can usually be conducted without the cardholder, the merchant or the bank, being aware, at least until the account is ultimately used for fraud. The rapid growth of credit card use on the Internet has made database security lapses particularly costly; in some cases, millions of accounts have been compromised. Aside from Internet transactions, there are a number of ways credit data may be compromised.

For Instance:

  • Use of a lost or stolen credit card
  • Stealing from a personal mailbox
  • Simply looking over a shoulder at the time of transaction
  • Going through personal trash
  • Sending unsolicited email
  • Looking at personnel records
  • Soliciting false telephone calls

Cardholders can report stolen cards quickly, but a thief can hoard a compromised account for weeks or months before any fraudulent use, making it difficult to identify the source of the compromise. The cardholder may not discover fraudulent use until receiving a billing statement, which may be delivered infrequently. Individuals may also become victim to credit fraud by surrendering personal information online to uncertified sources. Credit predators often persuade or trick individuals into giving up PIN and credit card numbers for the sake of personal gain. Upon noticing that fraudulent payment has occurred, one must immediately call or email their credit card provider to shut down the account and prevent any further credit damage. If unnoticed, one may go bankrupt before he or she even knew there was a problem.