Credit Card Fraud - Awareness

As more than 10 million Americans will be affected by credit fraud this year and Credit Card Fraud or Credit Card Hijacking is one of the worst nightmare for anyone. Let's us discuss about it in detail.

Credit card hijacking is the term used when a person’s credit card is used by some unauthorized person (eg: a thief ,Vendor) to buy goods or services. The credit card owner usually has trouble reasserting control over the card, because usually they don't find out immediately, and the owner must distinguish legitimate purchases from illegitimate in a credible manner.

There are four common forms of Credit card hijacking:

1.Identity theft:
One of an example of hijacking credit cards is called identity theft.It is one's deliberate assumption of another person's identity.It can be caused by breach of privacy of one's credit card or it can involve the victim compromising financial or personal information which allows the thief to hijack your existing credit card(s).

2.Credit Card Hijacking by Cancellation Barrier:
Another common form of credit card hijacking is used by subscription companies, the payments for whom are routed through a credit card.The organization creates certain barriers that make it difficult for a credit card user to cancel his subscription easily, and as such continue to charge him for services he no longer desires or needs. This is in direct contrast to the traditional method of subscriptions, where the subscriptions have to be proactively renewed, and are cancelled or suspended if payments are not on time.The credit card makes the user’s money more easily accessible to the subscription company, and the liability resulting from inactivity falls on the user’s shoulders, rather than the company that is providing the service.

3.Negative Option Billing:
Negative option billing is a business practice in which goods or services are provided automatically, and the customer must either pay for the service or specifically decline it in advance of billing. Negative option billing reverses the usual direction of sales transactions. It assumes that unless you say 'no', you've agreed to have bought the goods. This is the common practice used in book clubs, record clubs, and magazine subscriptions with automatic renewal. Some practitioners of negative option billing prefer to call it "advance consent marketing".

4.Billing for membership rather than services:
If a customer cancels services provided by a vendor, the vender would be committing fraud if they bill for services not provided (for example internet access). Some venders avoid this problem by billing monthly for a "membership", even though no services are used by the former customer. By retaining the membership number in an active status, the vendor makes it difficult for the customer to prove that the membership was cancelled.

As it is now known how Credit card fraud occur, it will be useful to act with caution.

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