Credit cards are incredibly attractive to thieves and fraudsters. Due to the fact that by simply using the card they can have access to a large credit line, credit cards are a constant invitation to fraudsters. Fortunately, credit card companies are aware of this issue and are prepared to combat this.
The first line of defence against credit card fraud is pattern recognition. Pattern recognition is when a credit card company looks for transactions that have the hallmark of a fraudulent transaction. This includes doing such things as quickly buying goods that are hard to trace and easy to resell as well as buying in amounts that are suspiciously close to transaction limits. Another indication is when the card is being used in two places at one time.
Another thing that both credit card companies and banks look out for is whether spending patterns quickly change. One of the most obvious ways in which they can change is by suddenly being used in another country. This is why it is preferable to inform a credit card company when going abroad as it can be quite common for a credit card company to suspend a credit card when the user is abroad, particularly if the user rarely leaves Australia.
Other things that credit card companies look for is a change in the pattern of spending, such as whether big items are being purchased, or whether there is a sudden pattern of buying different items (for example, buying calling credit for a mobile phone when the person is on a billing contract). These can be quite sensitive as a card holder may have their card suspended even though it has not been stolen, merely because there are out of the ordinary transactions on the credit card
Chip and pin is the newest way of combating fraud. Chip and pin forces a consumer to enter a pin number before purchasing an item with a credit card. This means that a credit card is hard to use if it’s stolen as it will also need a pin number. In the UK it has been so successful that it has cut card fraud incidents by around 80%.
These anti fraud measures help some of the largest credit card networks, such as VISA and MasterCard, offer a zero liability guarantee to all users of their cards who have an unauthorized transaction through theft or fraud.
