credit-card-fraud-traps-and-scams-guide-featured-image

Credit card fraud, traps and scams: A guide to minimising the risks

Being a victim of credit card fraud is not something anyone expects, but taking some simple precautions and knowing what to steer clear of can help you avoid some obvious traps.

Scams to relieve you of your money are nothing new, but nowadays there are even more ways for thieves to empty your bank account, wallet and credit card. The good news is you can take measures to make sure you don’t end up parting with your money, and knowing what to watch out for is the first step to protecting yourself.

Important contacts

New Zealand Police:

If a crime is taking place, or you are worried about someone’s security you should always dial 111 immediately. If it is not urgent, you can contact your local police station, details of which can be found on the New Zealand Police website – https://www.police.govt.nz

Commerce Commission New Zealand:

  • 0800 943 600

The Department of Internal Affairs

  • To report an SMS scam, forward the message to: The free shortcode 7726 (SPAM).
  • To report an email scam, forward the message to The Department of Internal Affairs at scam@reportspam.co.nz
  • For Fax scams, email a scanned copy of the scam to postalscam@antispam.govt.nz; fax the scam to (+64 4) 495 9314; or post a copy to: Electronic Messaging Compliance Unit, Department of Internal Affairs, PO Box 805, Wellington 6140

For all other scams, not fitting the above categories, go to Netsafe’s “The Orb” at https://www.theorb.org.nz, and email queries@netsafe.org.nz. Netsafe says The Orb is used by “the Police, Consumer Protection, NetSafe, the Privacy Commissioner, Commerce Commission and other agencies”. It allows consumers to use a central location to report any online scams you may have been involved in or are aware of. You can also call Netsafe toll free, on 0508 638 723 or +64 9 362 0971.

You will get your money back when:

  • A forged, expired or cancelled PIN or card is used.
  • A transaction took place before you received your card.
  • A transaction took place after you told your financial institution that your card was lost or stolen, or that someone else may know your PIN or password.
  • It’s clear you haven’t contributed to the loss.

You won’t get your money back when:

  • You acted fraudulently.
  • You didn’t keep your PIN or password secret.
  • You unreasonably delayed telling your bank of your financial situation, ie that your card or PIN was lost or stolen or someone else may know your PIN.

How-to guide for avoiding fraud

If you feel you’ve become, or might become a victim of fraud, read this guide to learn the common pitfalls of fraud, and how to respond if you find yourself involved in one.

I replied to an email, letter or text offering me a “prize”

How do I know this is a scam?

  • You did not enter the competition.
  • You are asked to pay a fee, provide bank account details or personal documentation to claim your “prize”.

What’s going to happen if I fall victim to this type of scam?

  • Your money has gone, and the prize will never arrive.
  • Scammers often ask you to send a copy of your driver’s licence and passport to “confirm” your identity before claiming your prize. This information is used to steal your identity.

Take these actions

  • Don’t reply to the email.

An email asked me to enter my account details

How do I know this is a scam?

  • Criminals try everything they can to make the email appear as if it’s come from a genuine institution.
  • Typically, a phishing email has a link, an attachment or call to action for you to update your details. The link takes you to a website that has the same look and feel as the original but is always a hacked site that may contain parts of the genuine domain, for example http://gorazor.ru/ua/.bnz.co.nz.
  • Your financial institution or a government department will never contact you asking you to enter your account or internet banking details.
  • Grammar and spelling mistakes are a dead giveaway.

What’s going to happen if I fall victim to this type of scam?

  • If you click on the link, you are asked to enter your online banking information or credit card details as you would when logging on to Internet banking.
  • Once the scammers have your Internet banking details, they have full control of your finances and are capable of anything, from emptying your bank account through to applying for a credit card or home loan in your name.

If you have not opened the email or attachment, take these steps

  • Send the email to your financial institution as an attachment to alert them of the scam.

If you have opened the email and entered your bank account details

  • Take these actions:
  1. Check your online bank statement for any unusual transactions and contact your lending institution immediately, informing them you have entered your banking details into a fraudulent email and ask for your account to be frozen.
  2. Perform a scan on your computer, checking for malicious software.
  3. Change your Internet banking login information, usernames and passwords for any other online accounts.
  4. If you have lost money, you need to file a police report.
  5. Check your credit history, to see if your details have been used to apply for a credit card or loan.
  6. Report the scam to The Department of Internal Affairs at scam@reportspam.co.nz
  7. Spread the word among your friends, family and social network to increase awareness of the scam.

Someone has called me asking for my details offering to log on to my computer

  • How do I know this is a scam? Someone contacts you over the telephone saying they’re from Microsoft, Inland Revenue, your lending institution or another trusted source and asks for your banking details or for you to log on to your computer.
  • Representatives from one of these trusted organisations will never contact you asking for your personal information.

What’s going to happen if I fall victim to this type of scam?

  • They will ask you to verify your credit card details or provide them with your credit card or security number. This information is used for fraudulent purposes.
  • If they ask you to log on to your computer, you are directed to a hacked website where your personal information is compromised.
  • Once the scammers have your credit card information, they may use it to steal funds from your accounts or steal your identity.

Take these actions

  • If you’re unsure about the legitimacy of a phone call, hang up and call the official number of the organisation they are claiming to be from, as this will help identify whether the call is legitimate or not.
  • If you think you provided your account details to a scammer, contact your bank or financial institution immediately,inform them of the situation and ask them to freeze your bank account.

Someone is trying to use me to launder money over the Internet

How do I know this is a scam?

  • The mule is usually approached online via email or instant message, or criminals may advertise on legitimate employment websites and newspapers.
  • These scams may take the form of unsolicited job offers or opportunities which promise you can work from home and make easy money.

What’s going to happen if I fall victim to this type of scam?

  • Once the mule is recruited by the fraudsters, they either open a new bank account or provide details of their bank account to receive the stolen funds.
  • Once the funds are received they are transferred offshore to a third-party criminal account.
  • The mule collects a commission for the transaction and is left open to criminal prosecution by the police or having their identity stolen by the scammers.

Take these actions

  • If you believe you have engaged in a money laundering scheme:
  1. Contact your financial institution immediately and inform them that you have had an unauthorised deposit into your account.
  2. Contact the police and inform them you believe you have accidentally participated in a money laundering scam.
  3. Keep all correspondence between yourself and the criminals to assist police in their investigation.
  4. Ignore any further attempts at solicitation by the criminals.

Someone has been using my credit card

How do I know this is a scam?

  • Skimmers steal your card information via a device that is fitted to the area where you put your card into an ATM. Then they steal your PIN number through a device attached to the top of the keypad or a small hidden camera fitted to an area where it can film people entering their PIN.
  • Tampered with machines often look suspicious and can be identified by wiggling the area where you enter your card into the machine. If it’s loose, walk to another ATM.
  • Other signs that your card has been skimmed include a purchase on your statement for goods or services that you never used, in a place you have never visited.
  • You are contacted by a member of the fraud investigation team from your lending institution, or they block your account due to unusual transactions.

What’s going to happen if I fall victim to this type of scam?

  • A “cloned” card can be created to spend your money and credit.
  • The stolen amount may be large or small depending on the scammer’s method of operation.
  • The stolen information may be used to steal your identity and apply for loans or additional cards in your name.
  • ANZ and other major lenders monitor your account 24 hours a day and will notify and suspend your account if a suspicious transaction is discovered.
  • Visa and Mastercard’s Zero Liability agreements refund all defrauded funds, provided their conditions are complied with.

Take these actions

  • Banks usually advise you must:
  1. Contact your lending institution as soon as you read your statement and see a suspicious or unauthorised transaction.
  2. Have your primary and additional cards and accounts blocked and reissued.
  3. Create a record of the fraud and complete a transaction investigation request form, outlining the list of transactions you believe are fraudulent.
  • It is also advisable to:
  1. Obtain a credit report to verify that your details have not been used to open any fraudulent accounts.
  2. Report the incident to your local police.

Someone has applied for credit in my name

How do I know this is a scam?

  • Often there are few warning signs before you are contacted for payments against the credit or services the criminals have acquired using your identity.
  • Charges that you don’t recognise may appear on your bank or credit card statements.
  • You might receive mail from a company or organisation you have had no interaction with, often relating to payment of debt or inquiries into services you have not used.
  • Irregular or failed postal delivery of bank or credit card statements can indicate criminals are intercepting or redirecting your mail.

What’s going to happen if I fall victim to this type of scam?

  • The impact of identity theft can be both financially and emotionally devastating and it’s complicated and time-consuming for an individual to rectify.
  • Criminals use the information to obtain credit; purchase goods or services; falsify applications for passports, driver licences or other documentation.
  • Crooks can even fraudulently claim government benefits, medical treatment or engage in other criminal activity in your name.

Take these actions

  • If you believe your identity has been stolen, you should:
    1. Report the crime to your local police and to the relevant authority, eg your bank for a misused credit card or The Department of Internal Affairs for a passport.
    2. If you believe someone may have used your identity details fraudulently, take the following actions immediately:
      1. Request a copy of your credit file from a credit reporting agency such as My Credit File to confirm the information on the file relates to applications for credit you have made.
      2. Contact any credit providers listed on your credit file to whom you have not applied.
    3. Keep records of your conversations.
    4. When dealing with a matter of this severity, keep all notes of conversations including:
      1. Names
      2. Contact numbers
      3. The date you spoke
      4. Key details of the conversation
    5. Your files is then investigated.
    6. Each credit provider will conduct their own investigation and notify the credit reporting agency of the outcome. The agencies then remove any fraudulent information from your credit file.

The item I bought in an online auction hasn’t arrived

How do I know this is a scam?

      • The item costs considerably less than the online retail price.
      • The website has consistently negative feedback and poor reviews.
      • Scammers can provide a link to their preferred banking site that can infect your computer with malware once clicked.

What’s going to happen if I fall victim to this type of scam?

How you paid for an item determines what the possible repercussions are.

      • If you paid via wire service, your money and goods are lost.
        eBay strongly discourages the use of instant cash wire transfers, such as Western Union, because there is no recourse available if the item is not delivered as promised
      • If you paid by credit card, you may be able to cancel the payment or be reimbursed by your financial institution.
        Card issuers and schemes provide some level of protection provided you meet their electronic funds transfer policies. However, this method of payment provides your private financial details to strangers

Take these actions

      • If you have fallen victim to an online auction scam, report the incident to your local police.
      • You will need to provide the following documentation:
        • Copies of all emails relating to the offence.
        • A copy of the auction page, including the username of the offender, the item number and a description of the item you bought.
        • Bank and transaction records.
      • If you paid by credit card, contact your financial institution and fill out a transaction investigation request form. Get a copy of your credit report and statements to check there are no unusual transactions on your account and no products have been applied for in your name.

finder.com/nz’s credit card fraud prevention tips

In this day and age, you should be just as concerned about leaving your credit card unattended at a bar or restaurant as when you are using it for online transactions.

The misuse of credit cards is a popular crime for one simple reason – a credit card transaction involves a transfer of valuable information over networks that often don’t carry enough protection, making it an easy and beneficial target for fraudsters.

How many Kiwis suffer from cybercrime and credit card fraud?

According to IDCARE (New Zealand and Australia’s National Identity and Cyber Support Service), in the year to December 2016 300,000 New Zealanders were the victims of scams and identity theft, to the tune of a whopping $1 billion. This equates to an average loss of $10,000 per incident, but sadly, less than 7 percent of individuals targeted ever reported the theft to police. If you feel you have become a victim of identity theft, you can contact IDCARE on 0800 201 415.

Top 11 credit card scam prevention tips

Although it’s impossible to predict whether you’re going to be a victim of credit card fraud, here are a few tips that can help protect you just in case:

      1. Never let your card out of your sight. No matter where you use your credit card, make sure you can see it at all times. Keep it away from prying eyes and camera-equipped mobile phones.
      2. Keep your card to yourself. It’s alright to treat your card like treasure and not share it with friends or family members. Make sure you sign your card as soon as you receive it.
      3. Don’t click on suspect email links. This form of phishing is gaining popularity and prompts unsuspecting people to click on links and check their offline/online accounts. Never log in to your credit card or bank account through an external link.
      4. Don’t fall for “update information” emails. There are instances when fraudsters send emails to individuals asking them to update their credit card or bank account details. Never click on the links in such emails, and never provide any information.
      5. When online, look for https://. If you’re using your credit card details online, look for https:// at the beginning of the website address instead of the previously prevalent http://. The added “S” means the site has an an added level of security.
      6. Review your statements. Go through your statements carefully each month, and if you spot a suspicious transaction, report it immediately.
      7. Don’t sign blank receipts. Some hotels still require their guests to sign blank receipts when they check-in. Never do this, and ask the person you’re dealing with to enter an amount instead. When you check out, make sure the receipt is ripped up or shredded.
      8. Back up details. Keep a backup of your credit card numbers and account numbers (memorised or securely stored), in case you need to report stolen cards or fraudulent charges.
      9. Use safe websites. Any website you make purchases through should offer safe and encrypted transmission of your information. For optimum safety, look for a padlock icon just before the address bar in your browser.
      10. Don’t provide details via email. Never provide your credit card or bank account details via email. No reputable seller deals this way, and remember that emails aren’t secure.
      11. Notify your bank when you move. Before you move, make sure you inform your bank, because you never know who might get access to your financial information.

How does credit card fraud work?

Card fraud occurs when someone makes use of a credit, debit or stored value card to make purchases or withdraw cash without the owner’s permission, and of the three, credit cards are the most commonly misused. Fraudsters keep coming up with new ways to use credit cards, and while many previously used methods have become obsolete due to technological advancements, some of their methods still manage to serve a purpose.

The following four categories account for a significant percentage of all credit card fraud reported in New Zealand:

      • Card-not-present fraud. In this scenario, a fraudster makes use of your credit card details to make online or over-the-phone transactions, as there is no need for a physical card, a PIN, or a signature.
      • Counterfeit card fraud. Making a counterfeit credit card is not difficult, if one has the right tools and supplies, and when it comes to obtaining credit card data, fraudsters get this directly from your card using a method called “skimming”, or they can buy it from underground rackets.
      • Not-received fraud. This is when a fraudster gains access to your credit card before you do, mostly through your mailbox.
      • Application fraud. In this case, someone might applies for a credit card in your name, using your personal details, and then use it to make purchases and cash advances.

How can I protect myself from fraud?

Fraudsters and scammers can gain access to your credit card or its details in various ways, so it pays to be watchful. To minimise the possibility of credit card fraud and misuse you need to take certain protective measures, which include the following:

      • Don’t provide your credit card details to any business over the phone, via email or text message.
      • Don’t part with your credit card details on websites you don’t trust
      • When making in-store purchases or paying at restaurants, keep your card in sight, and watch out for a second card reader used for “skimming” your card’s information.
      • Don’t fall for phone calls from fraudsters pretending to be from the fraud department of your card provider.
      • When you get a new card, sign it immediately.
      • Memorise your PIN and destroy any written evidence of it.

What should I do if I suspect fraud?

While credit card fraud is not difficult to prove in court, not all cases make it that far, mainly because many fraudulent schemes are not easy to pin down. Besides, there are instances when fraudsters operate from outside New Zealand, which puts them beyond the authorities’ control. If you suspect you’re a victim of fraudulent transactions, here’s what you can do:

      • Overseas scams. To report your concerns, contact your local police and The Department of internal Affairs.
      • Financial and investment scams. Malicious offers related to credit accounts, superannuation funds and the like fall under this category, and you should report these to the Ministry of Social Development on 0800 556 006 or by email using the online form.
      • Tax scams. If you feel you’re a victim of a scam targeting your tax returns, file a complaint with the Inland Revenue, which you can do via email, phone, post or in person.
      • Bank and credit card scams. In such situations, you should get in touch with your bank or card provider first, the police and depending on the manner the fraud was conducted, The Department of Internal Affairs or Netsafe (using “the Orb online form).

How am I protected against fraud?

Credit card providers continue to look for ways to make credit card transactions safer and more secure, and there have been noticeable improvements in this realm since credit cards first came into being.

Secured credit cards

Nearly every credit card provider relies on multiple methods to provide security to cardholders. ANZ, for instance, relies on Falcon for round-the-clock account monitoring, and BNZ uses Netguard as an extra layer of security when you are banking online.

Protective measures

Credit card providers, as mentioned, make use of multiple safety measures, and here’s what you can expect from a typical modern-day credit card:

      • Credit card codes. If you look at the back of your credit card you’ll see a card verification value (CVV) number, which card issuers rely on to establish if a user actually has access to the card in question. If you have a Visa, Mastercard or Diners Club card, the last three digits on the back of the card make the CVV number, and in the case of American Express cards, the last four digits make the CVV number.
      • Security chips. While credit cards previously stored cardholder information on magnetic strips, newer cards make use of microchips, which offer increased protection when compared to magnetic strips. Data on these cards is encrypted and more difficult to copy.
      • Personal identification numbers. Newer cards also eliminate the need for signatures on receipts. You have to enter a PIN instead, therefore increasing security to a certain degree.
      • Online security. Mastercard SecureCode and Verified by Visa provide additional security when you use a Mastercard or Visa credit card online. These programmes require you to enter certain personal information before completing unusual or suspicious transactions.
      • Additional features. Certain high-end credit cards offer additional peace of mind, through zero liability policies and optional identity theft cover.

Government action

The New Zealand Government says in order to combat crime: “It is improving systems and processes that involve identity data. The relevant agencies will also intervene in cases of identity theft when they have the legal power to so.” They want it known that “There are serious consequences for committing identity crime. Individuals found guilty of fraud in New Zealand face large fines, and may find themselves behind bars.”

Conclusion

When you get a new credit card, it is important you know how to keep it safe, and signing it as soon as you receive it is only the starting point. While credit card fraud is not uncommon, there is no reason why you can’t keep your credit card safe if you follow the simple measures mentioned above.

Was this content helpful to you? No  Yes
Back to top

Read more on this topic

Go to site