Your Credit Card Fraud Glossary

Lindsay KonskoJuly 8, 2014
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It isn't just criminals and cops who benefit from knowing the language of credit card fraud. You may find yourself a victim and need to explain what happened to a credit card rep in order to dispute the charge. Using the right term can help them understand what may have happened. Terms may also help you understand a security breach at a third party, so you know how much risk you’re at.

Truthfully, the most important reason for knowing these terms is knowing what activity they imply. That gives you awareness if you sense something isn’t right. You’ll be able to identify fraud happening, possibly at the moment it occurs, if you are aware of all the different possibilities for fraud.

Account takeover

This occurs when a thief gets access to your account and changes your PIN and other important information, so they can access the account and you can’t.

Bust-out fraud

In this scheme, someone applies for a credit card, either in their own name or using a stolen identity. The cardholder uses the card "responsibly" for a time — making purchases and paying them off as required — in order to establish the account as trustworthy and build up the credit limit. Then they max out the card and disappear without paying.

Card-not-present

Fraud committed using stolen credit card information but not the actual card. It occurs most often with Internet transactions but also by phone. Your card information may have been compromised by a third party security breach or by skimming or cloning (see below).

Child identity theft

When a child’s information, especially Social Security number, is stolen and credit accounts are set up in their name. This is a great reason to pull your child’s credit report at least once a year.

Cloning

Using stolen credit card data, often from skimming (see below), to create a duplicate of a credit card. The data is encoded onto hte magnetic strip of the fake card. Cloning has become more difficult with the advent of EMV chip cards.

Credit card fraud

A catch-all term for when a credit card is used without the cardholder's authorization — or even when the cardholder uses the card with no intention of paying the bill.

Dumpster diving

Sorting through someone’s garbage with the hope of finding personal information that can be used to commit fraud.

EMV

security feature that encodes credit card data on a chip embedded in the card. Stolen data from one transaction using the chipped card can't be reused for another transaction.

Familiar fraud

This is essentially impersonation, when someone you know pretends to be you in order to get your personal information.

Fraud

This is the general term that encompasses any attempt, using some form of misrepresentation, to steal assets of another party. There are both federal and state definitions as to what specifically constitutes fraud.

Friendly fraud

When a cardholder charges something and then deliberately initiates a chargeback with the issuer in order to keep the items they purchased without paying for them.

Identity theft

Using another person’s identify, especially a Social Security number, to obtain credit or steal assets.

Medical fraud

Stealing someone’s personal information to obtain medical care. It can sometimes be used to bill private insurance or Medicare and then get reimbursed for services that may or may not have been provided.

Pharming

To redirect people from a legitimate website to a fake website made to look like the real one.

Phishing

Usually done via an email that appears to come from a legitimate source, it’s an attempt to get you to provide personal information to a phony source. The thieves then use that information, often usernames and passwords, to commit fraud. These solicitations have many tell-tale signs, of which typos and poor grammar are the most common.

Shoulder surfing

When someone looks over your shoulder when you’re in the process of entering a PIN. This is just one reason why ATMs have wide-angle mirrors.

Skimming

A method of stealing credit card information. A skimmer is a small device attached to a credit card reader that collects data from the magnetic stripe on the card.

Smishing

The same as phishing, but the scam message comes via cell phone text message. You are asked to call a toll-free number and led through an automated voice-response protocol, just like when you call your credit card company. You get asked to enter your credit card number, your CCV, and ZIP code.

Sniffing

Intercepting Internet traffic passing through a computer network. It’s a bit like eavesdropping on data passing through the network and grabbing up data that can be used for fraud.

Social Security fraud

When your Social Security Number is used so a thief can get your personal information. The key element in identity theft.

Synthetic fraud

Combining fake and real information about a person, in an attempt to create a whole new identity under which new credit accounts can be opened.

Vishing

Just like phishing, but a thief tries to steal personal information by installing software on your computer via video file.

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