Epic Credit Card Frauds And How to Avoid Them

By | July 18, 2017

Epic Credit Card Frauds And How to Avoid Them

While financial institutions take great precautions to ensure that customers are secure, we can do our bit too. So, remember to keep your Credit Cards close and pay closer attention to your statements. Like the saying goes, ‘Precaution is better than cure’.

Now, the first step to protecting your card is to understand what Credit Card fraud is and learn from its history.

Additional Reading: Credit Card Payment Through Net Banking

What is Credit Card Fraud?

When someone steals your card or its details to use it without your permission, you become a Credit Card fraud victim. In this case, the thief can use your card to make purchases and you might end up paying for it if you don’t pay enough attention to your statements and take action in time.

How Your Money Is Stolen

There are different ways a thief can steal your Credit Card. Gone are the days when a pickpocket would pick your wallet and steal your card. Today hackers use more sophisticated methods to pilfer your Credit Card information.

There are three major ways thieves steal your money:

Additional Reading: 5 Common Credit Card Delusions We Suffer From

Physical Stealing

This is one of the oldest ways a Credit Card is stolen. It also is probably the most harmless of all theft. If you lost your card (physically), you could always call your issuer and place a request to block the card. Plus, these days, financial institutions have several layers of security such as having you input a one-time password (OTP) before processing any payment. However, it’s best to report and block a lost or stolen Credit Card as soon as possible to avoid any unauthorised use.


This is another way of stealing card information – also physically. Thieves either click pictures of the card or trace out the details on carbon/butter paper. Some even use a “skimmer” where all the details are skimmed out on a magnetic tape within seconds. It is usually a small device attached to card machines that is painted in to blend with the machine’s color.

Additional Reading: Credit Cards If You’re Earning Less Than Rs. 20,000 Per Month


A homophone of “fishing” – phishing is the most popular way of Credit Card fraud. Thieves call up victims on the phone or over email and trick them into sharing their card details – including CVV and PIN number of the cards. Watch out for this. No bank or financial institution will ever ask you for details such as your CVV, PIN or OTP.


Carding is also a pretty common way of stealing Credit Card information. It is a pretty sophisticated process where a hacker gains illegal access to a store’s payment processing server and steals all the Debit and Credit Card information used at the store. The hacker then sells the information to a third party – called a Carder – who in turn purchases gift cards with the information and makes high-end purchases. However, with the additional layer or security that most cards have, that is sending an OTP to your mobile phone, requiring you to enter your ATM PIN or a security code, you should be safe as long as you don’t share these details with anyone!

Additional Reading: Steps To Stay Safe From Credit Card Fraud

The Greatest Credit Card Frauds

Here are some of the most epic Credit card frauds in the past. Don’t let them alarm you, though, as banks and financial institutions have seriously upped security, making it quite difficult for fraudsters to gain access to your information.

CardSystems Solutions Data Breach – 2005

In 2005, hackers broke into the payment server of CardSystems Solutions, a third-party payment processor in America, to steal 40 million Credit Card information. Names, card numbers and security pins were compromised.

Apparently, the hackers logged into the database illegally and ran a script that acted like a virus. The script searched out certain types of transactions and transferred the data into a different server.

Additional Reading: How To Look For The Right Credit Card

  1. Anup Patel and the Case of Counterfeit Cards – 2008

Anup Patel, a computer science student in the UK, used a sophisticate method of installing undetectable cameras in gas stations to pick up information of Credit and Debit cards. Patel and his partner Anthony Thomas used the information to make duplicate cards and used it to withdraw money at various ATMs. The duo managed to swindle 20,000 Credit and Debit Cards and stole $3.2 million through the cards!

  1. 7-Eleven ATM Data Stolen – 2009

Just after being certified with a “safe-payment” certificate, ATMs at 7-Eleven – a Texas-based convenience store, seem to have compromised data of 140 million Credit Cards! Hackers apparently injected a SQL attack on the firewall of the company’s card processing unit – Heartland Financial Systems. The breach costed 7-Eleven about $12 million in payments to customers.

  1. Target Data Breach – 2013

One of the largest security breaches in the history of Credit Card frauds, the Target (convenience store) breach was big news. The breach affected about 70 million cards and Target ended up shelling out an estimated $2 billion in compensation to customers! The security breach came during the holiday shopping season. The information was collected using a new form of malware.

Additional Reading: Using A Credit Card Regularly? Here Are 10 Important Things That You Should Know

  1. The Debit Card Case – 2013

A network of eight hackers stole prepaid Debit Card information from various databases and used it to collect money from ATMs across 26 countries! They stole $40 million in just a matter of 10 hours in 36,000 transactions! They withdrew another $5 million 9 months later.

 Don’t freak out about using your Credit Card. Here are some positive pointers:

  • In 2016, although there were attempts to defraud, there was less information stolen. This translates into the fact that security is stronger and your cards are more protected than ever today!
  • Every time you swipe your card or enter details to transact, your card is being assessed for fraud.
  • You are never held liable for unauthorised transactions! If you keep track of your Credit Card statements, you would probably know when something fishy occurs. Intimate your bank immediately and the rest will be taken care of.

Additional Read: Credit Card HandBook: All Questions Answered

Tips to Avoid Credit Card Fraud:

  • Update contact details with issuer

If you haven’t already signed up for email or SMS alerts with you bank, do so right away! Keeping abreast with your Credit Card activity is the best way to avoid falling prey to Credit Card fraud.

  • Report Fishy Activity

Something doesn’t look right in your Credit Card statement? Report it to your bank immediately. Ask to temporarily block your card and do not spend from the card anymore. If you’ve lost it physically, request to permanent block your card and ask the bank to issue you anew one.

  • Never Reveal Card Details

Be aware of random people masquerading as bankers and requesting for your Credit Card details. No bank does that. Keep your CVV, card number and PIN details to yourself. Never write them down. Memorize them.

  • Transact via OTPs

Always transact using One Time Passwords. Whenever you’re making a payment online, always ask to generate an OTP that generally expires within a short period of time, say a few minutes.

The best way to really avoid fraud is to stay alert and act quickly. In case of any redressals, you could always approach the Reserve Bank of India for help. The RBI has appointed an ombudsman to help you with your complaints if your bank doesn’t respond to your queries.

Additional Reading: 10 Smart Ways to Avoid Credit Card Frauds

Now that you know everything about Credit Card frauds and how to avoid them, let’s help you find one that suits your needs.

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