The most common type of credit card fraud is when an offender purchases an item online or by telephone, by utilising a credit card number that they have obtained unlawfully.
There are various means by which these numbers can be obtained:
- From a credit card generator site on the Internet
- From an unscrupulous retail merchant who retains credit card numbers processed through a retail outlet and uses them unlawfully
- From offenders who utilise skimming machines to record multiple credit card numbers via retail outlets
- From sourcing discarded copies of credit card vouchers via waste receptacles
- From hacking into computes where credit card numbers are stored
Normally when a merchant enters the credit card number to pay for purchased goods, the appropriate financial institution approves the transaction on the basis that the credit card number is legitimate and that there are sufficient funds in the nominated bank account. It is only after the billing cycle of the relevant credit card is completed, that the legitimate cardholder may become aware of the unauthorised transaction.
In most instances of this nature, the financial institution will reimburse the cardholder, as there is no signature to authorise the transaction. The financial institution will then lodge a charge-back against the retail merchant who becomes the complainant.
If the cardholder is reimbursed for the loss, financial institutions have agreed that they do not require the cardholder to report the matter to police for investigation.
If however a credit card has been lost or stolen, the financial institution does require the matter to be reported immediately.