Credit card fraud is an ongoing concern for consumers and merchants alike. Millions of shoppers are affected by thieves lurking in the shadows of e-commerce sites each and every year, waiting to gather pertinent card details to make fraudulent purchases. While some headway has been made in the last few years intended to deter criminals stealing information at brick-and-mortar retailers, the threat of scammers online remains prevalent.
Some misconceptions surrounding credit card scammers have been brought to light in a recent study conducted by Forter, a California-based e-commerce fraud prevention and detection company. In an analysis of more than 3 million transactions in the fourth quarter of 2016, one might assume that credit card thieves are in it for a new luxury bag or a pair of the trendiest kicks, based on the most common purchases made with stolen credit card information. In reality, credit card fraudsters are in it for one reason and one reason alone – the cash.
Through its analysis, Forter was able to determine what credit card thieves were spending the most money on when stolen card details were used online. A combination of luxury items, digital products, and electronics topped the wish list, including purchases, like:
- Diamond necklaces
- Designer tote bags (Kate Space or Michael Kors)
- High-end watches (Fossil)
- Name-brand backpacks (Marc Jacobs)
- Walmart and Kohl’s gift cards
- iTunes vouchers
- Web services
- Wearable technology (Fitbits)
- Macbook accessories
- Earbuds and headphones (Bose)
- Mobile accessories like chargers
At first glance, it may seem as though credit card thieves are in the business of cyber crime to get high-priced items for themselves, but a closer look reveals the long-game for fraudsters.
Forter’s analysis explains that once a credit card thief has a consumer’s card details, purchases are made for the aforementioned items, en masse. No, a criminal isn’t going to carry four Kate Spade bags at a time; instead, he is likely to resell items through questionable e-commerce sites to unassuming, deal-hungry consumers. The high-dollar items are marked down a small percentage as to not set off consumer alarm bells or give the idea that the product may be a fake. A 20-30% discount on a designer accessory entices consumers to pull the trigger on the purchase online and feel like they’re getting a solid deal on the buy.
The unfortunate truth is that credit card thieves are using their own e-commerce websites to resell legitimate designer goods to unknowing consumers with an ongoing, costly consequence. As soon as the buyer enters his or her credit card information to purchase the discounted product, the credit card thief has access to new credit card details that are then used to repeat the cycle into perpetuity. Consumers think they are getting a bargain on a high-dollar item when they are simply padding the pockets of cyber criminals. Cyber criminals are smart in how they market to the masses, utilizing low-cost social media ads and easy to navigate websites to lure the crowds. As more consumers are drawn to the fraudulent merchandise online, the higher the ranking the websites receive in online searches. The cycle continues until someone gets wise to the fact that the goods being offered are, in essence, stolen, and the credit card information used to make the purchase on the site is used for another fraudulent purchase before the product arrives.
Credit card fraud prevention is a difficult task, but understanding the way the vast majority of cyber criminals think and work helps reduce the potential for having credit card details stolen. In an earlier study, Forter found that elite credit cards – those marketed mainly to the wealthy – have a higher chance of being stolen than basic consumer credit cards. Two times as many elite cards are stolen as other credit cards, due to the fact that cyber criminals realize two truths about the credit card elite: the spending limit is often exponentially higher than the everyday consumer’s credit limit, and large purchases are less apt to be quickly noticed on elite credit cards.
Targeting elite credit cards gives cyber criminals the ability to make substantial purchases without as much of a threat of being caught in the act. That’s because some elite credit cards, like the American Express Centurion card or the Visa Infinite card, require cardholders to spend an impressive amount each year. Checking statements for discrepancies in spending may not be as routine of a task as it is for credit card holders who have a much smaller limit or lower spending tendencies. Credit card thieves can get away with a $10,000 purchase of designer items far easier than with elite credit cards than they could with a basic cash-back credit card.
Ways to Prevent Credit Card Fraud
While there is no single fool-proof way to deter credit card fraud online, consumers can take some simple steps to protect their card details from being used in fraudulent transactions. The first step is to use caution when buying items or services online. Websites that are secure typically have “https” in the address bar and a small lock symbol in the lower corner of the browser. If there is a tinge of concern that a website may be fraudulent, find the product on a different site that has these safety features.
In addition to being careful about where credit card information is entered online, consumers should regularly check statements to ensure no fraudulent charges have been made. If a retailer is not recognizable or an amount does not add up to the purchase price, there’s a good chance a credit card thief may have acquired the card details. Individuals can work directly with their credit card issuer or bank to shut down any credit card that has been used in a fraudulent way, and potentially with the retailer to recoup some if not all of the fraudulent charges.
Credit card fraud is an ongoing concern as more retailers make their way into the e-commerce world. Although credit card thieves have created ways to make fraud look legitimate, consumers can take greater control in protecting their information by understanding how fraudsters work online.