By Kayla Donohue & Cory Gates

*"Credit card (or debit card) fraud is a form of identity theft that involves an unauthorized taking of another’s credit card information for the purpose of charging purchases to the account or removing funds from it."

Elements of credit card fraud:

1.) When an individual uses, sells, takes, signs, or forges another individuals credit/debit card or other card information.

2.) When the individual uses his or her own card knowing that is has been revoked or is expired. Another scenario is that the account lacks the funds for the transactions.

3.) Another element of credit card fraud is when the individual sells services or goods to someone knowing that the credit/debit card is being used without the proper authorization or was obtained illegally.

There are three main types of credit card fraud. Credit fraud is a broad term that describes the use of another's credit or debit card, or any other comparable card type, with the intention of buying goods and services while avoiding payments.

Identity theft: The use of personal identification information of another individual, without authorization to commit credit fraud or other forms of crime

"Identity assumption: long-term victimization of identification information" *

"Fraud Spree: Unauthorized charges on existing accounts" *

There are typically two categories in which credit card fraud will fall into: Account takeover and application fraud.

Account takeover is the criminal hijacking of an existing account. The offender can obtain personal identification about a victim, and changing the account login, and billing address. The offender can then report the card as stolen in order to receive a new card in the mail.

Application fraud is the unauthorized application and opening of credit card accounts in someone else's name. This occurs when the individual manages to obtain personal identification about the victim in order to fill out the application.

Ways in which an offender can gather your personal identification information:* Use of lost or stolen cards *removing items from your mail * watching over your shoulder during transactions *digging through your trash *unsolicited emails *false telephone solicitations *going through personnel records.

Biggest credit card scandals: Marr Maxx, the parent company to Tj Maxx, Home Goods, Marshals, and several other stores had a gap in it's security hole from some point in 2005 through 2007. The Parent company stated that it might never know the full extent of customer information that was leaked from it. It's estimated that is more than 45 million card numbers. The breach had been taken place long before the company became aware of it, and before the company was able to warn its card holders. Because of this a lot of fraud was perpetrated using the leaked information, including one transaction in a Florida store that cost the store eight million dollars in merchandise due to one gift card fraud ring.

Target spent a lot in advertising for the 2013 black Friday, and due to that millions of shoppers poured through the doors. Many of those shoppers later discovered that their credit card information had been stolen when they swiped their cards at target. It was a simple piece of malware that had been installed on a company computer that spread itself to all the registers in every single target, and was able to siphon customer data when a card was swiped. Target swore that no customers would lose money due to the breach, target lost big time with a nearly 46% decline in sales and a $61 million recovery bill, It also cost the target CEO, Gregg Steinhafel, his job.

Cardsystem Solutions: A virus installed on the computers of this third-party MasterCard and visa transaction processor in 2005 resulted in the breach of nearly 40 million customers' card numbers and personal information. This was one of the first eye opener cases that should the card companies and consumers the real dangers of cyber crime.

How to avoid credit card fraud:

1. Monitoring - Record your transactions and monitor all of your accounts. You should review your credit and debit card statements monthly and check your credit report at least once a year, Federal law requires each of the three nationwide credit bureaus (Equifax, Experian and TransUnion) to provide one free credit report each year. there is also a way to purchase credit-monitoring services from these bureaus that will alert you immediately if there is a change to your credit history.

2. Alerts - Many credit companies provide fraud alerts. It is important to take full advantage of any alert program offered by your credit card company. Sign up for email, text or phone alerts from your bank or credit card companies to contact you if there is any suspicious activity on your account.


3. Online Precautions - Protect your identity online by always being aware of any communication that requests credit card information, account numbers, passwords, social security numbers or a birth date. A legitimate alert or confirmation from your financial institution will never ask you to send this information over email. Other ways to protect yourself from fraud online include:

Keeping your operating system, browser and anti-virus software up-to-date, Installing a personal firewall, Use strong passwords and change them often, and Never give your credit card number to a site without SSL (Secure Sockets Layer) protection.

4. Offline Precautions - While internet scams are becoming more frequent, credit card fraud is certainly still a risk in the real world as well. Always shred any piece of mail that contains personal or credit card information before throwing it away. Or consider signing up for automatic bill pay online instead of receiving paper statements to avoid this altogether. Also be aware of your surroundings when giving a credit card number over the phone. Ordering pizza at the soccer field could expose you to fraud just as easily as responding to a phishing scam.

5. Choose a Card with Fraud Protection - Select a credit card that offers fraud protection without additional fees. For example, Discover card members are not responsible for unauthorized purchases on their account. Also look for a program that offers credit card services such as automatic alerts, paperless statements and fraud specialists on staff.

So what should you do if a store or website you frequent is hacked for credit card information? Request a new card right away and employ all of the means above to keep an eye on your accounts. If you learn your identity is being used fraudulently, place a fraud alert on your name and identity by contacting the Federal Trade Commission and the national credit reporting organizations. The sooner you report the incident, the better chance you have of minimizing damage to your credit score.

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