Credit cards have become one of the most preferred modes of alternate payment in India. As of April 2020, a total of 57.4 million active credit cards were in circulation across the nation.
- These cards accounted for nearly Rs.77 million transacted through PoS terminals alone.
Such a far-reaching absorption of a relatively new payment system was made possible thanks to the ever-increasing push towards digitisation. Unfortunately, this also created new issues like credit card fraud. The numbers of such frauds skyrocketed with criminals preying on unsuspecting victims unfamiliar with the new systems.
- Nearly 1,40,000 cases of debit card, net banking, and credit card fraud were registered between FY 2017 and FY 2020, accounting for Rs.589.14 crore.
One of the prominent reasons why credit card frauds in India are continuously on the rise is because of poor understanding of this payment system. A significant number of new cardholders lack proper exposure to this technology along with information regarding the types of credit card fraud they might come across.
Payment card scams and how they work
Credit card scam is an umbrella term, categorising various techniques and methods used by criminals to dupe card users. This is the reason why every credit cardholder should be familiar with the examples of credit card frauds and learn how to prevent the same.
Some of the common types of credit card frauds include –
- Card skimming
Skimming is a common type of fraud where a criminal uses a handheld device, called a skimmer, to copy card details. Such information collected is then used to clone the card and used later for unauthorised activities.
Skimming is most commonly concluded when someone uses a card to transact at installed machines like ATMs or POSs. A common way to prevent such a scam is to ensure that the card is not taken out of sight while making transactions. One can also opt for an insurance policy such as Wallet Care cover provided by Bajaj Finserv under their Pocket Insurance & Subscriptions, to cover for any financial liability that might occur because of such credit card fraud.
- Card Not Present fraud
CNP or Card Not Present frauds are mostly committed online, where the card’s details are stolen via means of tele-phishing or email phishing. This data is later used for unauthorised transactions. Criminals also use fraudulent websites masking as genuine ones to capture transaction details.
This type of credit card fraud prevention is rather simple. One should refrain from divulging important details, such as their card number, CVV, any OTP, over the phone or via mail. Also, it is better to ignore unsolicited emails at all cost. These emails often carry links or spyware that help collect valuable information.
For additional financial cover that will protect against any unauthorised access of data, one can opt for a plan like cyber security cover.
- Card theft
Stolen cards are often used to copy details and to create duplicate credit cards. These details are also often farmed.
- Recently, nearly 1.3 million payment card details were leaked and were available for purchase on the internet, out of which 98% originated from various Indian financial institutions.
The best way to prevent this type of credit card fraud is to block or cancel a payment card as soon as it is misplaced. Moreover, if scammers misuse any details that they might find in a payment card, an identity assure plan in place can offer the financial coverage required to seek legal resolution.
Other than these, there are multiple types of credit card frauds that are practised by criminals. Fortunately, careful customers are much less likely to fall prey to any such tactic. Remembering the tips mentioned above and practising some basic safety measures will be more than adequate to keep one’s finances safe.