How to Prevent Credit Card Frauds

31 July 2024

4 min read

Credit cards are commonly used for various daily purchases, both in person and through apps. However, like many financial products, credit cards are susceptible to fraud.

Credit card fraud is a significant issue, affecting not only customers but also card issuers and banks. It occurs when someone makes unauthorised transactions with another person's credit card information. Therefore, both card issuers and consumers need to understand how credit card fraud works and adopt preventive measures to safeguard against it.

3 Recent Credit Card Fraud Cases in India

The following highlights some of the recent credit card fraud cases in India:

A Mumbai woman recently fell victim to an online credit card scam. Posing as a bank employee, the scammer promised her a new credit card and sports club membership.

After sharing her personal details, she received an Android phone to activate the card. Following the scammer's instructions, she inserted her SIM card into the new phone and activated the card, which resulted in fraudulent transactions worth ₹7 lakhs.
In a recent case, a gang operating in India's cybercrime hub, Jamtara, reportedly earned between ₹1 lakh and ₹1.5 lakh daily. Police revealed that three individuals were arrested for three cybercrime cases across Gujarat, Punjab and Telangana.

The fraudsters lured victims by sending deceptive links, posing as bank representatives offering cash rewards. After obtaining credit card data, they tricked victims into disclosing their bank details, ultimately transferring funds into their accounts.
A couple was arrested for allegedly photographing an acquaintance's credit cards and cloning his SIM card before making fraudulent transactions totalling ₹13.3 lakhs. The victim’s phone suddenly stopped working. After getting a new SIM card from his telecom provider, he discovered that ₹13.3 lakhs had been charged to five of his credit cards.

This led to the couple's arrest. They had cloned the SIM card and copied the credit card details during their meeting with the complainant.

Different Types of Credit Card Frauds

The following are the different types of credit card frauds you may encounter:

Phishing

Phishing involves scammers pretending to be insurance agents or phone marketers to trick you into giving them your card information. They also send emails that appear to be from legitimate banks or financial institutions.

When you click on the link, you are taken to a fake website where you are asked to provide your details.

Skimming Card Information

Scammers use a device called a skimmer to steal your card details from the magnetic strip present on the back of the card. They attach skimmers to credit card readers at retail stores, ATMs, gas stations, and other businesses.

Once they get your details, they either sell them to other scammers or use them themselves to make purchases on your card.

Application Fraud

Scammers use stolen personal information, like your name, address, birthday, and social security number, to apply for credit cards in your name.

You might not notice this fraud until you apply for credit yourself or check your credit report. Although you will not be responsible for the fraudulent charges due to card protection, this kind of fraud can lower your credit score.

Misplaced or Stolen Cards

A very common form of credit card fraud occurs when you lose your card or someone steals it. A thief might take the card during a robbery or steal it from an unsecured place.

Scammers may also dig through discarded bills or documents to find credit card details. They then use the card details to commit fraud until you cancel the card.

SIM Swapping

Fraudsters contact your mobile operator, pretending to be you, and request a duplicate SIM card. They then deactivate your original SIM card. They can then receive OTPs and complete online transactions using your information.