What is Credit Card Fraud

Posted by  Fintra , updated 2021-04-18

What is Credit Card Fraud

Credit cards have become an essential part of us and in our daily life. We can forget to carry our wallets, but not mobile and credit card! Wherever, whenever we desire to purchase or book anything, this little friend of ours always comes to our aid. In critical times when cash is immediately required, we can visit ATMs to withdraw through the help of credit cards.

However, what to do when we accidentally lose or misplace it? What if it lands in the wrong hands. It’ll surely be a delight and treat for the fraudster but a nightmare to the cardholder! Before a fraudster attempts to milk your plastic buddy for all it’s worth, it’s wise to take precautions and be proactive. In this blog, we will enhance your knowledge and guide your path on how to prevent such nightmares.

The topics we will enlighten you on are: 

  1. What Is Credit Card Fraud?
  2. What Is Identity Theft?
  3. How Does Credit Card Fraud Happen?
  4. Types of Credit Card Fraud
  5. Prevent and Protect Yourself from Future Credit Card Frauds
  6. 5 Steps to Take If Credit Card Is Lost or Stolen

What Is Credit Card Fraud?

The digital world has brought us some marvellous good effects, however, along with the good, it has brought some bad effects as well. In today's digital world, one huge negative effect it has brought is credit card fraud and ID theft. They’re continuing to rise even as we speak. In simple terms, credit card fraud is fraudulently done when somebody makes an unauthorized purchase using a stolen or misappropriated credit card (or card number).

The invention of the internet and the endless supply of e-Commerce websites that came with it, it has made it even easier for credit card scammers to pinching in your details. In fact, before the period when the internet exploded into society, one may have visualized credit card fraud as a human dressed black stealing cards from wallets. However, nowadays these scammers have an arsenal of tricks and methods to swipe from credit cards, and most of the time they don't even need the individual’s physical card to do the fraud. Besides stealing credit cards, the fraudsters can also steal an individual’s credit card account number, PIN, and security code to make an unauthorized transaction without having their physical credit card. Such unlawful transactions are termed as card-not-present fraud.

Credit card frauds are indeed the most common types of identity thefts and with the immense availability of credit cards in India, it’s not surprising to note that millions of users fall, victim, each year. To protect us from such fraudulent charges, the government and financial institutions have crafted special laws. For example, certain laws state that you might have to pay a minimal amount for the unauthorized use of a credit card. Moreover, if the card gets lost, you must report the loss immediately before someone uses it- by reporting immediately you won’t be responsible for the unauthorized charges. If a fraudster steals your credit card number, but not the card itself, then there is no liability on the cardholder at all.  

What Is Identity Theft?

Identity theft is the illegal use of your name, birthday, PAN or AADHAAR card number, credit card numbers, and more, to use existing credit accounts or open new ones in your name. When this happens, criminals get to capture the spending power of your credit, and you get stuck with the huge bill.

                                                                                                                                                                                                                         Identity Theft 

How Does Credit Card Fraud Happen?

There are various ways fraudsters can get your credit card number:

Types of Credit Card Fraud

In every field of work, creativity always exists, and so does in the field of fraud. Just as fashion designers, fraudsters are extremely creative. How they invent various ways to pilfer your personal information and destroy good credit is very mind-boggling! Some of the ways include:

                                               Types of Credit Card Fraud

Prevent and Protect Yourself from Future Credit Card Frauds

Fraudsters are everywhere; they have embraced the credit card industry as a gold mine or a place where they can make a quick buck. Although it is completely tough to minimize the risk of becoming a victim of credit card fraud schemes, Fintra here describes several steps to protect yourself and reduce your risks:

                                       Fraud Websites 


                              Customer Care Fraud


5 Steps to take if your Credit Card is Lost or Stolen

Being quick in reporting a lost or stolen credit card always counts. Fintra presents five vital steps to take if you’re in such a situation: 

Step 1. Call your credit card issuer: It is strongly advised to immediately report the loss or theft of your missing card to the credit card issuer. The credit card issuer’s phone number will be printed on your credit card statement or online.

Step 2. Get prepped with information: When you call your credit card issuer they’ll first verify your identity. Hence, before making the call get prepared to provide your details such as your name, address, and Pan/Aadhaar card number. Your issuer will ask when and where the card was lost or stolen and when it was last used. They will review all recent transactions and inform you to check if any of them seem to be fraudulent.

After interrogation, the card issuer for a while will freeze or cancel your account and issue a new credit card with a new account number. There won’t be any major effect on your credit report if you’ve replaced your lost card. Just remember to inform the vendors of your new card number from which you’ll be making payments to them. It’s always vital to continue making payments on time.

Step 3. Follow up and keep records: Besides making a call do also follow up about your loss. Email your credit card issuer or send a letter. Here’s what to conclude:

Your account number.

The date and time you noticed the card went missing.

How and when did you report the loss to the issuer.

Always keep a copy of your letter and note when you sent it.

Step 4. Check your credit card statement: Always closely check your credit card statements after reporting your card lost. If any charges are noticed which appear fraudulent or unfamiliar, call the credit card company immediately.

Step 5. Check your insurance coverage: Some banks and card issuers do provide policies to cover your liability for credit card theft. It is advised to check how much insurance coverage you have availed from your bank/issuer. If possible, do opt for a coverage policy for lost cards.


Unfortunately, credit card fraud can harm your credit, especially if it takes a while for you to notice it. Such frauds affect your credit in two major ways:

  1. Late payments: Fraudsters usually use your personal information to open a credit card without having the intention of paying the bill When the fraudulent card is reported to the credit bureaus, it could plummet your credit score rating. Learn about the importance of payment history by clicking here.
  2. High credit utilization: If a fraudulent credit card is being used to increase charges you haven’t authorized, it can affect your credit utilization. When a fraudulent activity raises your total credit utilization over 30%, your credit scores could temporarily suffer. Learn about the credit utilization ratio by clicking here

Whether you’ve or not been a victim of credit card frauds, it’s always advised to take precautions to protect your precious little friend. Take immediate steps to lessen the chances of being susceptible to credit card thieves.

                         Various Ways Credit Data Stolen