Card crimes

Overview

Canadian Financial Institution reported losses nearly reaching one (1) billion dollars in the last two (2) years. While Canadian consumers do not suffer direct financial loss, ultimately losses are recouped through increased fees administered by the financial institutions. Additionally, consumers can suffer adverse consequences such as having their account frozen resulting in late payment of bills and subsequently loss of trust in the banking system.

Warning signs - How to protect yourself

  • Counterfeit card use: This represents the largest category of credit card fraud, organized criminals have acquired the technology that allows them to "skim" the data contained on magnetic stripes, manufacture phony cards, and overcome such protective features as holograms.
  • Cards lost by or stolen from the cardholder: Typically the cards are stolen from the workplace, vehicles, health clubs, golf clubs, etc.
  • Fraud committed without the actual use of a card: No-Card Fraud or Card not Present Fraud (CNP).
  • Fraud committed on cards not received by the legitimate cardholder (non-receipt fraud): Non-Receipt Fraud where cards are intercepted prior to delivery to the cardholder.
  • Cards fraudulently obtained by criminals who have made false applications: Fraudulent Applications involve the criminal impersonation of creditworthy persons in order to acquire credit cards.

Card-Not-Present (CNP) Fraud

CNP is often conducted by email as it's one of the most unsecure methods to conduct card orders. However, merchants can also receive payments via ecommerce orders and telephone. Merchants who accept orders can be victimized if they are not aware of fraud protection protocols or are not abiding by the regulations.

CNP fraud also includes overpayment. A suspect provides a credit card and requests to charge extra on the card. Once completed, scammers request those funds be returned (to pay for shipping of goods). By doing so, scammers are turning stolen credit cards into cash. Consumers and merchants are then held responsible to repay any funds and merchandise lost.

The airline industry, pharmaceutical companies, gaming industry and telecommunications are the largest victims of CNP. In most instances, scammers buy tickets using stolen credit cards and sell the product for a cheaper price for profit. Not only do the merchants lose the product sold, they are often required to pay back the funds to the financial institutions.

Warning signs - How to protect yourself

  • Before shipping merchandise, call the customer and verify the transaction information.
  • Be sensitive to priority shipments for fraud-prone merchandise, which may mean a fraudulent transaction.
  • Be aware of orders requesting urgent shipment, especially if the shipping address does not match the credit card's billing address.
  • Be aware of orders from repeat customers that differ from regular spending patterns.
  • Use credit card companies' address verification services and card validation code 2 (CVC 2).
  • Contact your processers. Ensure security measures are established to prevent victimization and reduce unwanted charge backs.
  • Merchants should review guidelines for tips on safe sale.

Were you a victim?

Canadian Anti-Fraud Centre
Toll-free: 1-888-495-8501

Competition Bureau of Canada
Toll-free: 1-800-348-5358

Ontario Provincial Police
Toll-free: 1-888-310-1122

Financial Consumer Agency of Canada
Toll-free: 1-866-461-3222

Better Business Bureau
(BBB Locator Tool)


Fraud: Recognize, report and stop it!

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