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            Credit Card Fraud

Credit card fraud happens in various forms, but it means that a person uses your credit card to make purchases without paying for them or to obtain funds from an account that he does not have permission to use; hence, it is unauthorized and fraudulent. Credit card fraud is also an element of identify theft.  Credit card fraud is a serious threat that costs millions each year; statistics for 2006 estimated £428 million in the UK. 

When your credit card is stolen, you have access to 24-hour toll-free telephone numbers to report your stolen card and stop thieves from making purchases with your credit card. When a thief compromises your card it is a different matter. You may not discover that your card has been compromised until you received your credit card statement and often we fail to check our billing statements promptly. At this stage it is far too late and the thief has made use of your card and information for his own gain.  

There are different ways that credit card fraud are perpetrated and you as a potential victim should be fully aware of them all, how they work and what action you can take. 

• Compromised accounts – websites are compromised and data theft takes place. Your account information is stored on your credit card in a magnetic strip and your personal information such as address and phone numbers are used by the thief as verification information when he uses your card.
• Mail/Internet order fraud – this type of fraud is committed when dealing with companies online or where goods have to be shipped to the customer. The merchant cannot physically verify that you are the holder of the card as you cannot be present at the point where the sale is being made. Fraudsters also make many smaller purchases using this method as merchants are not likely to investigate such small transactions.
• Account takeover – this is identity theft using either application fraud or account takeover. Application theft is where the thief uses stolen or fake documents to open accounts in your name. Account takeover is when he masquerades as you, have your mail redirected to your “new” address and then applies to have a ‘lost’ card replaced which he then uses fraudulently.
• Skimming – this happens when information is stolen when you as the cardholder do a legitimate transaction. Bar and restaurant employees are famous for skimming when they write down your 4-digit security code. This is difficult to detect if the thief stays with skimming smaller amounts.
• Carding – this is the process when a thief verifies that the data of the card he has stolen is valid. He makes use of a website that does real-time transaction processing. If the card is processed successfully, he knows he can use the card. He usually makes a very small purchase for verification purposes only.

Credit card fraud runs into billions each year with merchants and banks losing money and consumers are put to huge inconvenience as they have to replace cards. All round it is a lose-lose situation for honest businesses and legal credit card holders, hence why vigilance is crucial.

Credit in Minutes Tip #1

Stay on top of your credit report. Most credit reports contain errors. Make sure you check your credit report every year (you get one free credit report every twelve months) and if there are errors make sure to challenge them with the reporting credit agency. Credit agencies are required to investigate each and every challenge that gets reported.

Credit in Minutes Tip #2

Just because you qualify for all of those credit cards does not mean you should get them. A person with too many credit cards looks sketchy in the eyes of a potential creditor. Think of it this way: if a person is financially stable does he or she need ten different credit cards? Wouldn’t just one or two suffice?

Credit in Minutes Tip #3

The best way to raise your credit score is to make all of your payments on time. It sounds too simple to be true, but that’s all there really is to it. Staying out of debt and/or making all of your debt payments on time will keep your score up where it should be.

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