How to combat credit card fraud and stay safe

We all know how easy and convenient it is to pay by card. However, there are a few security threats that you need to bear in mind. Even though cashless transactions may reduce your perception of the risks involved, they’re still real and you need to keep an eye on what could happen with your card details when buying online or in-store.

What is credit card fraud?

Credit card fraud is an inclusive term for any type of fraud or theft committed using a credit card. The purpose of the crime is usually to purchase goods with fraudulently acquired card details or to directly steal from a victim’s account. Unfortunately, credit card fraud is on the rise and criminals are becoming increasingly inventive with their schemes. There are many different scams currently operating within the UK which we will explore later in the article.

Credit card fraud UK

A report by UK Finance revealed that there was a 19% increase in fraud losses on cards issued in 2018 in the UK. Finextra reported that 22% of the 2,000 people that they surveyed had been victims of credit card fraud in 2018, with a total of £4.1 billion being stolen in the UK. They go on to highlight the lack of awareness of this type of crime; 31% were not alerted by their bank that they had been hacked. These statistics emphasise that there is a level of risk involved with credit card payments, fuelled by a lack of awareness. This article will provide tips for combatting credit card fraud and helpful advice for making your transactions as secure as possible.

Credit card fraud sentence in the UK

The credit card fraud UK punishment is dependent on several factors, including the level of culpability, the loss caused or intended and the impact on the victim. Fines are calculated based on these points and the culprit’s financial circumstances. Community and custodial sentences may also be applied to the offender depending on the severity of the crime. Conspiracy to defraud can result in a maximum sentence of 10 years imprisonment. (Sentencing Council)

Types of credit card fraud

Popular credit card frauds include, but are not limited to, skimming, investment scams and application. Credit card scams often involve more elaborate backstories and the criminal pretending to be someone they are not. Common cover stories involve the fraudster masquerading as your bank or HRMC and asking you for your bank and card details. One of the most prevalent ways of doing this is to send a text message pretending to be the cardholder’s bank alerting them to unusual activity in their account and prompting them to log in. At this stage, they swoop in and steal their details. Investment scams are another way that cardholders can be tricked into revealing their card details. Fraudsters can use lost or stolen cards to place multiple transactions until the card is cancelled. Without the pin, they are limited to paying via a contactless card reader or using it to buy goods online. However, this can still cause significant damage and cardholders should notify their bank as soon as they realise that their card has been lost or stolen. Cloning or ‘skimming’ cards means that credit card details are cloned on to a magnetic strip which is then encoded on to a duplicate card. These replicas are often declined by card readers, but if the card details are entered manually the fraudulent transaction can be completed. Card-not-present (CNP) fraud is normally conducted online using stolen card details but without the fraudster having access to the physical card. Application fraud is when the offender uses card details which are not their own to apply for a credit card. They start by finding the relevant supporting documents that will help demonstrate that they are (untruthfully) who they say they are.

What is identity theft?

Identity theft involves the stealing of personal information, normally to carry out fraudulent activities. Key information that criminals look to get hold of are date of birth, email address, PIN, national insurance number and address. Being in possession of these details could allow fraudsters to open bank accounts in your name and access further confidential information. From there they can claim benefits on your behalf, commit tax rebate or telecommunications fraud. Outside of fraud, once criminals have successfully stolen someone’s identity they can undertake all manner of criminal activities on their behalf. Victims of identity theft can face some serious and long-lasting repercussions if it goes on undetected. They could get dragged into a criminal investigation if they are perceived as having committed an offence. It can also cause damage to financial credibility with victims often having to deal with debts piling up and a low credit rating. Although these issues can normally be resolved, it can be time-consuming to prove that the victim was not involved in the crime and that their identity had been stolen.

Credit card skimming and phishing

Phishing is classified as fraud conducted over email, text or telephone where the perpetrator pretends to be a trusted organisation. Phishing examples include lucrative offers sent via email or text, requests to verify bank details or attachments containing viruses. Credit card skimming can take place when the cardholder is least expecting it and will only be alerted when they notice transactions they haven’t placed appearing on their statement. The capturing of details can take place at ATMs or petrol stations, anywhere that a small device can be fitted over the card swipe mechanism. A tiny camera can also be installed to record the PIN, allowing the fraudster to create a physical copy of the card. Credit card skimming devices can be detected by a few tell-tale signs, including a loose or protruding card reader, scratches around the terminal or a thicker keypad. If you have any doubts about its legitimacy, it is best to avoid it completely.

What to do if you're a victim of credit card fraud?

As soon as you realise that your card has been used fraudulently, tell your bank so they can cancel the card in question. This will stop the offender being able to use it and limit the financial damage. Your bank will issue you with a new card and start investigating the crime. In the UK, you should report credit card fraud or cybercrime to Action Fraud who can offer support and advice on how to proceed. You can report the incident online or call them on 0300 123 2040. Even if you believe the issue is already being resolved by your bank it’s important to alert Action Fraud as it may aid them in any ongoing investigations. After you have reported the fraud to the relevant organisations, you will need to safeguard your accounts by changing all passwords and PINs. Further to this, monitor your bank statements daily for the proceeding couple of months to check that there is no further suspicious activity. You can also request a copy of your credit file to see if your identity has been used to apply for loans or additional credit cards.

Tips to prevent credit card fraud

Credit cards eliminate the need to take physical cash with you. However, as discussed above you could be more vulnerable to threats from fraudsters and cybercriminals. We have highlighted 10 ways that you can keep your card details safe.

1. Don’t respond to emails requesting you to send your card details.

No bank is going to ask you to do this. Instead of replying to the email, inform your bank that you’ve received this correspondence so that others don’t take the bait. Card data should never be communicated via email and messages asking for your data should always be treated as suspicious. Likewise, only give away your details over the phone if you initiate the call, any received calls asking for details should be treated as suspicious.

2. Be very careful with giving others your card details full-stop. 

Unless you initiate the conversation and know the company is reputable, don’t provide your card details on the phone. This also applies if you are called and asked to give this information because of a ‘computer problem’.

3. Don’t use your card on untrusted websites. 

Be careful when using your card on sites you haven’t heard of before. Read reviews elsewhere on the internet and listen to your gut feeling. Other things to look out for include a padlock symbol and https:// protocol, rather than http://.

4. Don’t let your card leave your sight. 

Whenever you’re paying for something, ensure that you know where your card is at all times. Reputable outlets won’t have a problem with this. If you don’t trust the venue, feel free to opt-out when asked to open a tab and pay on the spot.

5. Sign your card as soon as you receive it. 

Signing your card will ensure that nobody else can if they get a hold of it. This is important because it means that, if your card is lost, nobody can claim that it’s theirs.

6. Don’t write your PIN where others can access it. 

This includes in your phone notes, on your card or in your wallet. Lose any of these after doing this, and you could be dealing with much more than lost property.

7. Keep all of your card details in a secure and secret place. 

This follows on from the point from above. Don’t leave your card information lying around the place. If possible, it’s preferable to leave everything in a lockable drawer.

8. Dispose of all receipts properly. 

This may sound a little far-fetched, but fraudsters have been known to trace back purchasing patterns to pretend they are you. Disposing of your receipts will ensure nobody can copy or capture your transaction history.

9. Open credit card bills as soon as possible and be aware of ‘bogus’ charges

Treat your credit card like your bank account: reconcile it monthly. Save your receipts so you can compare them with your monthly bills. If you find any unusual charges, try to contact whoever took the money first. If you still don’t recognise them, report them to your card issuer.

10. Be wary when using ATMs. 

If you sense something is wrong, then don’t use it. This applies especially when you’re in a foreign country and not entirely sure about your surroundings. Always check that the card slot hasn’t been tampered with and there are no scratch marks around it.

Credit card fraud prevention

Not only should individuals make efforts to protect their personal finances, but it is also the responsibility of merchants to provide a secure payment service for their customers. Therefore, they should select a Payment Service Provider (PSP) that offers credit card fraud detection and screening tools. On top of this, there should be SSL technology in place so that data can pass securely through an encrypted link between the browser and the server. Your PSP should be equipped to identify and prevent fraud from happening, allowing your customers peace of mind whilst purchasing. PSD2 and SCA are designed to protect consumers and hopefully reduce the number of instances of fraud. The introduction of stronger identity checks means that there will be a double-layered authentication process, thus making it more difficult for a fraudster to prove that they are someone they are not.

Conclusion

The prospect of fraud is frightening for many and although the risk can never be eliminated, there are many tactics to help reduce your chances of becoming a victim. With legislation like PSD2 coming into effect and growing consumer awareness of the risks of credit card fraud, hopefully, in the coming years, we will see a decrease in the number of offences. Our risk and fraud management services provide a range of user-friendly solutions to make your business’ website safe for customers. Contact us to find out more.