Why You Should Care About Card Not Present Fraud

By Jen D., April 11, 2019

Card not present fraud occurs when a credit card is used for an unauthorized transaction, without an actual card being presented to a merchant. An example of this would be a stolen credit card number (and details) being used remotely by a thief – for an online purchase, mail order transaction, or phone purchase.

According to the 2017 Nilson Report, worldwide gross credit card fraud loss for merchants and issuers sits at $24.26 billion in 2017 and is anticipated to reach $34.66 billion by 2022. If banks and credit card companies experience the brunt of this financial loss, why does this impact you?

First, it’s important to know that financial fraud affects much more than the banks; both merchants and issuers also lose money when goods are stolen. Often you may not even realize your credit card details have been taken remotely. This means you might yet have received unauthorized charges and be paying for additional transactions without realizing it.

Other times, a hacker might steal all of your information and open up multiple credit cards in your name, which can ruin your credit. Card not present fraud is different from traditional stolen credit cards. You’ll often still have the credit card safely in your wallet or purse, and not realize it has been compromised. With the increase in popularity of online shopping, it has made this type of fraud even harder to identify.

How Does Card Not Present Fraud Work?

A hacker gets a hold of your credit card details. This might be by hacking into your home network or via a breach of a credit card company’s data.
Criminals also gather credit card details via online phishing, malware, or through dishonest employees at businesses you frequent or online stores. Other times, credit card information is hacked through a digital credit card skimming machine installed by a criminal at the gas station.
Once this occurs, the scammer now has your cardholder name, billing address, account number, three-digit security code, card expiration date, or some combination of the above.
They will then order online goods and have them shipped to an address where they know no one will answer the door- then pick up the items from there. Or, they might order online gift cards, to use or sell. Other scammers request by phone or mail order.
Sometimes the issuer of the card (bank or credit card company) recognizes that a fraudulent purchase has occurred and blocks the purchase. They may alert the cardholder that unusual purchases have occurred and want them to verify their details and the intended purchase. However, this doesn’t happen that often as consumers spend frequently and generally want ease when shopping.

How to Prevent Card Not Present Fraud

Store your credit card statements carefully. Shred all financial documents before you throw anything away.
Beware of credit card skimmer machines. When you pay at a gas station, consider paying inside instead of at the pump. Notice if the device looks any different or has anything attached to it. Skimmers can remove safety stickers, which some gas stations put in place to protect machines, and add a device that will steal your credit card details.
Sign up for purchase alerts, so you are alerted by email or text about any purchase through your cards.
Regularly review credit statements and your credit score.
If you notice a fraudulent purchase, contact your credit card company immediately. Ask them to block your card and issue a new one.

While online scammers may seem to be multiplying in numbers and harder to catch, consumers can do their part to protect themselves. While education is vital (reading articles like this and sharing them with friends and family), another important step is removing your private information from the internet. People are often amazed when they realize that their social media posts have resulted in scammers gaining personal details about them.

Social Catfish does the hard work for you, through our proprietary algorithm. You can search your name, email, username, phone, or image(s). When doing so, you will be provided with a list of matching details across the search engine giants.