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Payment fraud

More than 50 per cent of the businesses reported fraud through payment channels. Moreover, there has been a growth in the volume of such transactions. It happens when a cyber attacker extracts the customer's payment details and uses them to conduct multiple unauthorised transactions without the account holder's knowledge. 

For example, they may extract credit card details and make unauthorised purchases. The banks may or may not send the transaction statements to the cardholder. It may not be sent if the criminals modify the account credentials and contact numbers. 

Nevertheless, businesses suffer when they have to settle such disputes. They must pay penalties, chargeback and investigation fees, and refund customers, leading to losses. 

How Does It Happen?

  • Someone creates a bogus customer account, and fraudulent payments are generated. Fake requests, refunds or bounced checks are used in such cases.

  • Tricksters intercept the transactions and payments or modify the amount to get cash out. They may initiate fake payments to get claims grants or refunds.

Various techniques used to commit such crimes are–  

  • Identity theft occurs when one conducts a transaction using the IDs of another person. Sometimes, the unsuspecting victim may not receive any communication regarding such transactions as the criminals steal their information and create a new identity to commit fraud. 

  • Friendly fraud happens when a person falsely initiates a chargeback and denies receiving the product to get a refund.

  • The criminals adopt other tricks, like using valid payment information to navigate and conduct transactions. They reroute the visitors to malicious sites to extract the payment details. Sometimes, they set up a merchant account to get such details from the customers. If the fraud is committed through a merchant account, the bank can deactivate the account to avoid risks. 

How To Protect Yourself?

  • Restrict access to confidential documents or data.

  • Monitor all transactions related to money transfers through your bank account.

  • Encrypt emails/documents before transferring them to others.

  • Use strong authentication, passwords or pins. 

  • If you suspect any crime, report it to the authorities.

Date Published: Sep 18, 2023

Types of fraud

A-Z of fraud

To help understand which fraud you've been affected by, we've categorised them into an alphabetical list.

What is fraud and cyber crime?

Cybercrimes can be of two types. First, it can be cyber dependent, where the fraudsters use online devices to convince the victim to accept their offers.

Advance fee fraud

If you are trying to get a loan for a house or a car, they ask to meet the provider to get the financing arrangement and pay the finder's fee in advance.

Corporate fraud

Corporate frauds can be complicated, committed either by the firm or an individual. Nevertheless, it mostly involves cheating where the employee or the firm.

Individual fraud

There are many types of individual frauds related to advance fees, investments, insurance brokers, bogus tradespeople, Ponzi schemes, pension liberation.

Online fraud

Hence the number of cases of online fraud is increasing each year, and most such cases include – account takeover, direct frauds, or scams related domain names.

Identity fraud and identity theft

The criminal uses the stolen identity of another person living or deceased to conduct unlawful activities like obtaining goods or services in another's name.

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