Traditional Techniques

The traditional and the first type of credit card fraud is paper-based-application fraud, wherein a criminal uses stolen or fake documents such as utility bills and bank statements that can build up useful personally Identifiable Information (PII) to open an account in someone else's name.

Application fraud can be divided into

1. ID theft: Where an individual pretends to be someone else.

2. Financial fraud: Where an individual gives false information about his or her financial status to acquire credit.

Illegal use of lost and stolen cards is another form of traditional technique. Stealing a credit card is either by pickpocket or from postal service before it reaches its final destination.

Modern Techniques

Sophisticated techniques, enable criminals to produce fake and doctored cards. Then there are also those who use skimming to commit fraud. Skimming is where the information held on either the magnetic strip on the back of the credit card or the data stored on the smart chip are copied from one card to another.Site cloning and false merchant sites on the Internet are becoming a popular method of fraud and to direct the users to such bogus/fake sites is called Phishing.Such sites are designed to get people to hand over their credit card details without realizing that they have been directed to a fake weblink/website (i.e., they have been scammed).

1. Triangulation: It is another method of credit card fraud and works in the fashion as explained further.

• The criminal offers the goods with heavy discounted rates through a website designed and hosted
• The customer registers on this website with his/her name, address, shipping address and valid credit card details.
• The criminal orders the goods from a legitimate website with the help of stolen credit card details and supply shipping address that have been provided by the customer while registering on the criminal's website.
• The goods are shipped to the customer and the transaction gets completed.
• The criminal keeps on purchasing other goods using fraudulent credit card details of different customers till the criminal closes existing website and starts a new one.

Customers till the criminal closes existing website and starts a new one.

Such websites are usually available for few weeks/months, till the authorities track the websites through which the criminal has enticed the individuals to reveal their personal details, which enabled the criminal to commit the transactions by using the credit card details of these customers. The entire investigation process for tracking and reaching these criminals is time-consuming, and the criminals may close such fake website in between the process that may cause further difficulty to trace the criminal. The criminals aim to create a great deal of confusion for the authorities so that they can operate long enough to accumulate a vast amount of goods purchased through such fraudulent transactions.

2. Credit card generators: It is another modern technique computer emulation software that creates valid credit card numbers and expiry dates. The criminals highly rely on these generators to create valid credit cards. These are available for free download on the Internet.