Credit Card and Debit Card Fraud

[ 0 ] October 31, 2013 |

Have you ever gotten a call to verify the charges on your Debit or Credit card?  If you are like most people, you would have gotten a call at some point and came away with wondering why they decided to call on that charge.  If the charge was not yours, you may be wondering how the person using it fraudulently got their hands on the card still safely tucked in your wallet.

Credit Card and Debit Card fraud has become big business in the criminal world.  Long gone are the days where a pickpocket steals your card and then tries to use it to buy items.  Nowadays, criminals have divided up the card fraud process into: The “stealers of cards”, the “resellers of stolen cards”, and the “users of stolen cards”. Depending on the sophistication of the criminal network, they may perform one or all of these steps, outsourcing the others.

The stealers of the cards come in many forms.  It could be a dishonest service industry employee stealing the card information when you pay for your meal, movie, etc…  It could be a hacker who broke into a computer system stealing the card information stored there.  Wherever the information came from, the stealers of the cards are after the information stored on the magnetic strip.  Nowadays the thieves rarely use the cards themselves, but typically sell the information to the next group…the resellers.

The resellers typically pay front line criminals up front for cards that are stolen and then resell them through various means to others at a profit.  In many cases the resellers don’t reside in the US and sell “blocks” of stolen cards to the users of the cards based on the quality and how recent they have been stolen.

The users of the cards are what most people would think of as common criminals.  In most cases the users are trying to get as much cash out of the cards as possible.  Most people in this category use the cards to buy easily resalable merchandise which include gift cards and electronics.  The goal of the users is to turn their investment in the stolen cards into cash, not necessarily to acquire “stuff”.  It is at this point that most card issuers fraud detection systems kick in and you get alerted.

With these sophisticated criminal networks out there, Credit and Debit Card issuers (like IAACU) utilize a wide variety of tools to detect fraud and protect consumer’s accounts from being drained.

Let’s take a look at how we keep your cards safe at IAACU.

Fraud detection on our credit and debit cards are built on a state of the art network system that analyzes cardholder usage.  The system calculates and analyzes the spending patterns for cards and assigns a fraud score each time the card is used.  The higher the score the greater the likelihood that the card associated with the transaction has been used fraudulently. Purchases outside of typical spending patterns or high-dollar purchases have a tendency to generate higher fraud scores. Department stores, Grocery stores and Supermarkets are favorites of the fraudsters and can also raise red flags if they meet certain criteria.    young woman talking on a mobile phone and holding a credit card

While IAACU is not the largest issuer of Credit and Debit cards, we take card fraud very seriously.  Our tools include:

  • Real time Fraud Detection based on the Card Issuers fraud management-scoring model. That detects fraud instantly (i.e while you are actually participating in the transaction).
  • Visa Fraud Department that monitors 24 hours a day, 7 days a week worldwide.
  • We have experienced employees trained in advanced fraud trends that monitor daily risk reporting.  We know what to look for to protect our members.  Our plastics department reviews detailed reports on everything from card activity in foreign countries, declined transactions, to suspicious activity based on fraud management scoring.  You can feel secure as a member when using our card online or at any store.

Detecting fraud is difficult.   As our member, this is what you can do to help:

  • If you get a call to verify a transaction, don’t panic.  Verify the transaction is legitimate or confirm that it is fraud.   By the way, you should never have to divulge your information (your card number, social security number, etc…) to verify the charge.  If you are uncomfortable with the person calling, just politely hang up and give us a call or call the number on the back of your card if it is after our normal business hours to discuss the charges.
  • Report any suspicious activity on your account as soon as possible to the credit union.
  • If you are traveling out of state or out of the country notify the Credit Union and we will have the account flagged so the card will not be restricted.

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Category: Technology/Security

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