Credit card fraud is a major concern for millions of credit card holders globally. In India, the number of credit card holders is growing by the day, and with it, the risk of credit card fraud.
Credit card frauds amount to millions of rupees in India alone. Besides financial damage, they might damage your credit health and also your reputation.
Thus, in this guide, we dive deep into what is credit card fraud and try to give you the maximum awareness about it.
Credit card fraud occurs when someone uses your credit card details or your credit card without your consent. They might use it to make unauthorized transactions or even access your funds.
Credit card frauds lead to significant financial loss, debt, and credit health damage. Besides these, they could result in collateral damage like loss of reputation. Credit card frauds occur in many ways, both online and offline. Therefore, it’s crucial for you to understand the risks.
According to the RBI, the cases of credit card scams and frauds in India are on the rise. According to a report by Statista, in 2022, Bihar topped the cases of credit and debit card fraud in India, with 562 cases registered with the authorities and under the purview of the IPC 420.
However, a blog by Forbes Advisor states that the cases of credit card fraud have been on the rise with 12,069 cases between April-September 2023-24 involving Rs. 630 Crores compared to only 2,321 cases involving Rs. 87 Crores just the year before.
This statistic highlights the growing need for vigilance among credit card users. They should understand what are the types of credit card fraud and how to protect themselves against them.
The following are the types of the most common credit card frauds in India and across the world.
It’s a credit card fraud that happens during online transactions where the cardholder isn't physically present. Fraudsters use stolen card information to make purchases on e-commerce platforms.
Example: A fraudster steals your card number and uses it on an online shopping website.
Skimming devices are attached to ATMs or payment terminals to steal card information when you’re swiping your credit card. The data can be copied to create a duplicate card, which could be used to make fraudulent transactions under your name.
Example: Your card is skimmed at a compromised ATM, and the data is copied to create a duplicate card that is being used in an unauthorized manner.
Fraudsters trick you into providing sensitive information via fake emails (phishing) or phone calls (vishing). This information will be used to make unauthorized purchases or even access your credit card funds.
Example: A fake email asks you to enter your credit card details to "verify" your account. These will now be used to make false transactions or access your funds.
In India, a lot of people are not careful and can discard their credit card bills and documents without much thought. Scammers can collect such information and exploit it for malicious purposes.
Thoroughly shred and deface those documents before dumping or discarding them.
Example: You get an email from an unknown source about filling in your credit card details. This could be a scammer looking for your sensitive information.
Fraudsters create fake cards using stolen card details to conduct unauthorized transactions.
Sometimes, they could create fake cards from stolen information using duplicate cards.
Example: Your card data is cloned and used to make purchases in another country. It could be used to fund illegal and anti-government activities.
If your card is lost or stolen, fraudsters can use it to make purchases before you report it missing.
Example: Someone finds your lost card and immediately uses it to buy items at a store.
If you click on a malicious link or use software on your phone or laptop, it could install malware on your device. This malware records your keystroke activities and collects sensitive information like credit card passwords and others to access your funds or make purchases.
Example: You didn’t use a virtual keyboard to insert your personal information like passwords and IDs and now you might be finding bills of purchase you didn’t make. Look for malware in your device because you could be a victim of keystroke capturing.
In this type of fraud, the fraudster gains access to your online banking or credit card account by hacking your password or using personal details.
Example: Your online account is hacked, and the fraudster makes purchases using your card.
Hackers could impersonate you, request a duplicate SIM card from your mobile operators, and ask them to deactivate your original number.
Example: Upon SIM swap, hackers could request new OTPs, make other passwords, and thereby access all your funds linked to your mobile numbers or UPI.
It is a case of identity theft where scammers could obtain credit cards based on your name and details. They could now use those cards for illicit activities.
Example: If you’re applying for a credit card, check the portal thoroughly. If they are asking for IDs that are beyond those required, you can do some background checks to verify whether they are legit or fake. These portals could use your original documents and IDs to carry out identity theft and application fraud.
Before you understand that you’ve been scammed or your credit card is being used improperly, you could lose a significant chunk of your funds. Besides these, you could even suffer reputation damage if your credit card is being used to finance illicit and anti-government activities.
So, it’s extremely important to identify and prevent credit card frauds before they even take place. These are the common red flags for credit card fraud:
Unfamiliar charges on your statements.
Unexpected alerts or calls from your bank about unusual activity.
Declined transactions for no apparent reason.
Immediately get in touch with your bank or law enforcement if you have noticed anything suspicious like the above.
It’s best to stay aware of credit card frauds and prevent them before you’re scammed. To do the same, please follow the advice below:
Avoid paper trails and shred credit card bills and other documents thoroughly.
Secure your credit card storage.
Never share your credit card password or details with anyone.
Enable multi-factor authentication for online transactions.
Create strong passwords. Also, regularly update passwords and avoid sharing sensitive information.
Only use secure websites (HTTPS) for online purchases.
Stay vigilant and alert if you get any calls, emails, or SMS links asking for your credit card information. Remember that no credit issuer or bank will make such calls or emails asking for your credit card details.
Don’t write your credit card passwords or PINs on paper or other things that you might lose easily.
Review billing statements and sign credit card receipts mindfully. Fill in empty spaces with zeros to account for a proper transaction.
Use RFID-blocking wallets to prevent scammers from accessing your contactless credit cards with RFID chips.
However, these days banks and credit card issuers are trying to use modern technology to combat the rising credit card frauds.
Banks use AI and machine learning to detect suspicious patterns in transactional behaviors.
The presence of EMV chips makes it harder for fraudsters to duplicate the credit cards.
Credit card fraud could affect you in many ways. They could have serious implications, including:
Financial Loss: Credit card frauds could drain your accounts or create significant debt charges.
Damaged Credit Scores: Fraudulent charges can impact your credit score negatively, especially if they go unnoticed for a long time.
Emotional Stress: The process of suffering a credit card scam, identifying it, and resolving the issues could be overwhelming.
Loss of Trust: You could lose your trust in online transactions, POS, or other avenues through which your credit card scam took place.
Reputation Loss: You could suffer significant fund loss which could affect your day-to-day life and essential payments. Besides these, if your credit card is used to finance illicit activities like anti-government projects or illegal stuff, you could face a social stigma too.
So, let’s find out what you should do if you think you’ve already been scammed.
If you suspect you’re a victim of credit card fraud, take instant action.
Report the Fraud: Contact the bank using the customer care Number and report the fraud immediately. Use the complaint reference number for future references. Also, lodge a written complaint at the bank branch to ensure thorough documentation.
Block the Card: Block the card temporarily to prevent any further transactions.
Call the Cyber Crime Helpline: If it’s a cyber credit card fraud, dial 1930 or call the Cyber Crime Helpline to lodge the complaint. They typically register the report, file the complaint, and start investigations within the first 48 hours.
File a Police Report: If it’s a stolen card or application fraud, file a report at the local police station. Filing an FIR may help recover funds and will be needed if the fraud leads to legal issues. Provide the necessary information to the Cyber Crime or the Police Station about your credit card issuer, the banks, the credit card number, passwords, OTPs, UIDs, and anything that’s relevant.
After 48 Hours: If more than 48 hours have passed since the scam occurred, you can file a complaint with the case details on the Cyber Crime Website.
Escalate if Needed: If you see that the bank is not taking any action or not taking your complaints seriously, you can directly get in touch with RBI at rbi.org.in and file a complaint against the bank authorities.
Monitor Your Statements: Keep a close watch on your credit card statements for any unauthorized transactions.
Check Your Credit Report: Regularly check your credit report for any fraudulent activity.
The RBI has issued detailed guidelines against unauthorized electronic banking transactions that also include credit card fraud. The following is the summary of the detailed RBI directive:
Banks’ Responsibility: Banks are required to compensate customers for unauthorized transactions after notifying them.
Two-Factor Authentication: For online transactions, RBI mandates two-factor authentication to reduce fraud risk.
Reporting Timeline: Victims must report fraudulent transactions promptly to avoid liability.
Zero Liability: If the customer reports the fraud within three days, they bear zero liability.
Limited Liability: If reported between 4-7 days, customer liability is limited.
SMS Alerts: Banks must send real-time transaction alerts to customers.
You can read the entire RBI directive here.
Credit card frauds are on the rise with the rise in disposable income and credit card holders in India. But maximum awareness of the frauds and their types, with a high-alert mindset can help you stay protected.
By following the RBI guidelines and using your credit card responsibly, you can protect yourself from financial losses arising due to these credit card frauds.
Credit card fraud can be simply explained as your credit card being used in an unauthorized manner by other users without your permission.
Credit card frauds occur when a scammer or fraudster gets hold of your credit card information and uses it to make illicit transactions. The main reasons for this could be hacking, identity theft, stolen or lost cards, and careless user behavior.
Yes, credit card fraud is a huge problem globally, amounting to a loss of billions of dollars worldwide. In India, with the rise in the number of credit card holders, the number of credit card frauds is also increasing. A period over the last financial year reported a staggering number of more than 12,000 credit card frauds, amounting to a loss of more than Rs.630 Crore.
There are multiple ways that scammers might commit credit card fraud. Some of the common ways are hacking, phishing and vishing, card skimming, keystroke capturing, application fraud, SIM swaps, stealing cards, and even exploiting discarded card documents.
Definitely the user who has suffered credit card fraud is the biggest victim.
However, according to the RBI guidelines, liability also rests with the bank that issued the card. In case the purchase is found to be fraudulent, then the merchant is liable to refund the customer.
Thank you. Your feedback is important to us.