How to Prevent Fraudulent Fake Credit Card Activities | CHEQ


Credit card fraud continues to be an issue that affects hundreds of thousands of people each year, and impacts credit card holders of all ages. Because instances of credit card fraud are common, it is not unlikely that anyone reading this article may have been a victim of fraud themselves or has a troubling story from a friend. But while stories of fraud come up frequently, many still have questions about how it occurs and what steps they can take to prevent it. This article will offer some insight into the world of fraud, and provide a few tips for both cardholders and banks to stay protected. 

What are some ways credit card fraud is committed? 

There are several ways in which bots and malicious human users commit fraud against credit card holders and banks. Two of the most prevalent forms of credit card fraud are carding attacks and chargeback fraud. 

Carding Attacks

This type of fraud occurs when a valid credit card is used by an outside party – either a malicious human or a bot – for malevolent purposes. The bad actor may attempt to purchase goods with a stolen credit card, or even test out different gift card numbers through an automated system to acquire a product or service without paying for it. 

This harms the end user of the credit card since their information is being stolen and their funds are being used without their consent. It also harms the business the goods were purchased from because they are losing inventory to a fraudster. 

Chargeback Fraud

Chargeback fraud occurs when a transaction is made between a bad actor and a business, and then the fraudster reports that transaction as fraudulent – causing the business to lose money and inventory at the same time. 

For example, a malicious human could purchase several items at once with the intention to resell them. That same person could then dispute the transaction and claim they never purchased those items. If their attempt is successful, they will end up with the items they wanted without losing a dime. When they resell those items, they can then make 100% profit on them while simultaneously harming the business. 

A similar situation sometimes happens accidentally to everyday people. Someone might forget that they made a purchase or have an ongoing subscription they forgot to cancel – dispute it and receive their funds back. This type of chargeback fraud is known as ‘friendly fraud.’ 

How can credit card fraud be prevented?

If an individual wants to be proactive in protecting themselves against credit card fraud, they can take a few immediate steps: 

  • Installing anti-fraud software 
  • Choosing strong passwords and updating them frequently 
  • Regularly checking recent transactions to check for anything suspicious 
  • Educating themselves on their personal credit card policies for fraud 
  • Checking the source of any unexpected invoices or payment requests

From a business perspective, to prevent malicious humans and bots from entering the funnel and ensuring trust from customers, they can research and deploy a Go-to-Market Security suite. This type of technology aims to block fraudulent activities from accessing their website and disrupting their organization. 

If someone is a victim of credit card fraud, what can they do? 

When credit card fraud occurs, that individual can immediately go through their recent transactions and make a list of any that are suspected fraud. They can then contact their bank by phone number or mobile app to dispute any charges. In some cases, that person will also be asked to contact the merchant if it was a legitimate business to which they provided their credit card in the past. It is also helpful for the individual to pull together a timeline of events so they can report back to the bank when the fraud likely occurred and what surrounding events may have caused it. 

If businesses find that they are frequently exposed to malicious activity, they can investigate the fraud to see if there are any common denominators, so that they can better predict what types of malicious users will try to attack them in the future and inform their teams on what to look out for. However, sometimes carding attacks and chargeback fraud are difficult to identify as they often look similar to regular website transactions. To get a better understanding of the activity on their website, they can start by scanning for bots and fake users.

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