What is Fraud? What are the Fraud types?

With the increase in the use of credit and debit cards and the increase in e-commerce transaction volume, there is a severe increase in the transactions of damaging the customer by taking advantage of user negligence.

So what is Fraud?

Fraud is to make unfair profits by making transactions from any business or ATM with the credit card or debit card of others, thereby damaging the real cardholder, corporation, or bank.

There are two types of Fraud.

Forgery in the physical environment (CP-Card Present Fraud)

Card present transactions are the process of copying the card (Track data) in the magnetic stripe or chip of the card to the POS or ATM, copying the card and printing the new card with the same card information, or using the card physically using the card. The card and Fraud physically are at the workplace or the ATM. These types of counterfeiting are done with lost, stolen, or copied (fake) cards, mostly from magnetic stripe and without a password.

Fraud cases are mostly experienced in jewelers, mobile phone and TL stores, electrical/electronic stores, markets, and fuel stations and ATMs. Although there was a significant decrease in the 'Card Present' counterfeiting after the Chip and Password (Chip & PIN) transition, there was a considerable increase in the cash withdrawal transactions made with counterfeit cards at the ATM.

Virtual Fraud Cases (CNP-Card Not Present Fraud)

In Card Not Present Fraud transactions, the card and fraudster are not physically at work. The transaction is carried out by entering the sensitive card data (Card Number, SKT, Security Code (CVV2) and Password) into the POS device by entering the workplace (MO-TO, Mail Order-Phone Order Frauds) or by the fraudster through the website (Virtual POS frauds).

The most effective method of preventing CNP counterfeiting is a powerful anti-fraud (Anti-Fraud) software and experienced fraud team. Fraud prevention software is beneficial in catching Fraud cases with rule-based and advanced filtering systems. Fraud software can find Fraud cases immediately after the transaction or prevent the transaction from catching before the transaction is delayed.

What are the things to do to protect against Fraud?

We can list the main applications that should be done to minimize fraud rates with Fraud control as follows:

  • The security code (CVV2 / CVC2) on the back of the cards is a piece of information that cannot be obtained even if the card is copied. Querying this code is one of the basic fraud control methods.
  • Thanks to Fraud control, once a fraudulent card and a fraudster have almost no chance of doing this a second time. Because the card and person defined by the system will not be able to make transactions on the same site for the second time, as this information is shared among other e-commerce sites, it will not be able to operate in another virtual store.
  • It is one of the key points of the fraud control system to check that the orders are made over a valid IP, to determine the domain address, to request detailed information from the bank in cases that cannot be determined.
  • The card information (Card Number, CVV2, and Expiration Date) must be entered more than two times, before blocking the card.
  • The operations must be done from the chip reader and by entering the password.
  • Physical security features (purple light, micro border, logo, signature tape, etc.) of the card should be checked in chipless cards.
  • In unencrypted transactions, identity control should be done in detail.
  • Comparing the signature on the signature band on the card with the signature on the transaction slips in encrypted transactions, the control of fraud cases can be significantly reduced.

If Fraud is suspected in any of the above steps, the bank should be contacted and reported.

Source: Wikipedia