credit card fraud

Examples of credit card fraud in the following topics:

• Consumer Misbehavior

  • Consumer misbehavior is specifically related to retail and other markets, and includes things from cutting in line to fights between customers to credit card fraud.
  • Credit card fraud is a wide-ranging term for theft and fraud committed using a credit card or any similar payment mechanism as a fraudulent source of funds in a transaction.
  • Estimates put the cost of credit card fraud to billions of dollars .
  • Many also use electronic tracking devices on products and closed-circuit television to fight shoplifting and fraud.
  • Credit card fraud is a form of consumer misbehavior that can cost billions of dollars a year.

• Forced Entry

  • In this context, the fraud will result in obtaining a benefit by one of a number of means:
  • Other forms of fraud may be facilitated using computer systems, including bank fraud, identity theft, extortion, and theft of classified information.
  • Identity theft is a form of stealing a person's identity in which someone pretends to be someone else, typically in order to access resources or obtain credit and other benefits in that person's name.
  • Identity theft occurs when someone uses another's personally identifying information, like name, Social Security number, or credit card number, without permission, to commit fraud or other crimes.
  • Identity fraud is often but not necessarily the consequence of identity theft.

• Avoiding Potential Fraud

  • Internet fraud can occur in chat rooms, email, message boards, or on websites.
  • In a call tag scam, criminals use stolen credit card and tracking information to purchase goods online for shipment to the legitimate cardholder.
  • Another tactic users employ to avoid fraud is erasing hard drives when throwing away old computers.
  • Erasing the hard drive can reduce the possibility of identity theft and other forms of fraud.
  • Clearing private data such as individual browsing history can also reduce potential fraud.

• Credit Cards

  • A credit card is a payment card issued to users as a system of payment.
  • A credit card also differs from a cash card, which can be used like currency by the owner of the card .
  • As all credit cards charge fees and interest, some customers become so indebted to their credit card provider that they are driven to bankruptcy.
  • Merchants may charge users a "credit card supplement," either a fixed amount or a percentage, for payment by credit card.
  • A credit card is a payment card issued to users as a system of payment.

• Collection from Delinquent Payables

  • If an individual does not repay borrowed money to a credit card company and 6 months of nonpayment have passed, the credit card company may declare a "charge-off. " This means that the debt is "written off as uncollectable," so that the credit card company will get a tax exemption on that debt.
  • A charge-off is the declaration by a creditor (usually a credit card account) that an amount of debt is unlikely to be collected.
  • Bad debts and even fraud are simply part of the cost of doing business.
  • A charge-off is the declaration by a creditor (usually a credit card account) that an amount of debt is unlikely to be collected.
  • Explain the ramifications of failing to repay credit card and loan debts

• The Financial Crisis

  • The 2008 global financial crisis was caused by widespread corporate fraud and risky loans and resulted in foreclosures, bank bailouts, and a global recession.
  • The first decade of the 21st century was marked by widespread corporate fraud and scandal.
  • By 2008, credit card debt had risen to over $1 trillion.
  • Even though CDOs consisted of subprime mortgages, credit card debt, and other risky investments, credit ratings agencies had a financial incentive to rate them as very safe.
  • As the value of homes decreased, owners were unable to borrow against them to pay off other obligations, such as credit card debt or car loans.

• Managing to Prevent Fraud

  • Typical tools used in forensic accounting are bank records, personal financial statements, interviews, and credit reports.
  • Employees are more likely to commit fraud when under situational or financial pressure, and when the opportunity to commit fraud is present .
  • Management helps to prevent fraud by reducing the incentives of fraud.
  • For fraud to occur in this situation, two employees must collude to perpetrate the crime.
  • Explain how a company can prevent fraud by establishing internal controls

• Obtaining Credit

  • A credit card company, which is a type of creditor, will look at information about the potential customer, or debtor, from a credit bureau in order to determine if the company will lend to the potential customer.
  • The credit card company uses the credit report, provided by the credit bureau, to determine if the lender is likely to pay back the loan.
  • Types of credit include: bank credit, consumer credit, public credit, and investment credit.
  • In the U.S., when a customer fills out an application for credit from a bank, store or credit card company, their information is forwarded to a credit bureau.
  • This information is used by lenders such as credit card companies to determine an individual's credit worthiness; that is, determining an individual's ability and track record of repaying a debt.

• Securitization and the 2008 Financial Crisis

  • They securitized mortgages, carloans, third world debt, credit cards, and student loans.
  • Credit agencies always rated CDOs with an AAA credit rating, even though some CDO's funds contained subprime mortgages.
  • Credit-rating agencies were either incompetent or perpetuating fraud.
  • The AAA credit rating became vital for bankers to sell the CDOs.
  • Banks and financial institutions had frozen all credit and loans overnight.

• Loyalty Marketing

  • To the general public, many airline miles programs, hotel frequent guest programs and credit card incentive programs are the most visible customer loyalty marketing programs.
  • CLOs connect offers or discounts directly to a consumer's credit card or debit card, which can then be redeemed at the point of sale.
  • To receive and use CLOs, consumers must willingly opt in to a CLO program and provide their credit/debit card information.
  • After consumers make a purchase at the designated retail location, the savings appeared are credited directly to their bank, credit card or PayPal account.
  • Moloney shows that nearly half of all credit card users in the US utilize a points-based rewards program.