Understanding and preventing cyber fraud
Definition and scale of the crime
Context of the crime problem
Common offender methodologies
Risk factors associated with victimisation
Law enforcement and regulatory responses (specifically, reporting)
Promising Crime Prevention Approaches (specifically, tips for protecting yourself online)
Understanding and Preventing Cyber Fraud
The internet has become the most popular mode of completing payments when it comes to online transactions. The banking system offers ecommerce, e-cash and e-services which improve for online transactions. The mode of payment facilitates an acceptance of the electronic payment required for the online transactions also termed as the Electronic Data Interchange (EDI) are increasingly becoming popular in the current digital age, thus facilitating an internet based means of shopping(Akila & Bhuvaneswari, 2018). In the current internet age, credit card transactions are increasingly being used over the internet which further suggests why instances of credit card fraud have also risen over the years. The aim of this report is to explore credit card fraud as a means of online crime. Additionally, the report seeks to document the methodologies of preventing the fraud as related to the situational crime prevention theory.
Definition and scale of the crime
Credit card fraud is one of the common types of online crimes experienced by internet users. Credit card fraud refers to a situation whereby another person users a credit card belonging to a different person to make unauthorized purchases (Akila & Bhuvaneswari, 2018). The activity associated with credit card fraud can take place in different way. For instance, if a person loses their credit card or have it stolen, it can be used to complete purchases which can take place online or in person. Fraudsters also have the ability of stealing credit card details such as the security code, pin, and account number. With this information, it becomes simple to complete unauthorized transactions without requiring a physical credit card. This forms a basis of a type of fraud referred to as card-not-present fraud (Akila & Bhuvaneswari, 2018).
Hadar (2019) provides an indication that the card not present fraud has worsened over the years in the U.S. Evidently, in 2016, the number of card-not-present fraud increased to $4.57 billion. This marks a rise of up to 34% from the value recorded previously in 2015. The situation has resulted to drastic impacts for small businesses and individual customers and their shopping experience (Hadar, 2019). The case of credit card fraud is continually becoming serious. Hadar (2019) notes that millions of American is considered as fraud victims which affect the region’s economy. Notably, credit card fraud is costly as it negatively affects the economy by depriving it billions of dollars. If a person becomes a victim of credit card fraud, the situation can be detrimental to one’s personal finances. This can disrupt one’s psychological as well as their emotional wellbeing which arises from an increased level of stress derived from the experienced credit fraud event. Despite this, it is evident that different tools can be used to protect identity theft which further results to cases of credit card theft.
Elements of the Crime Problem
Context of the Crime Problem
Credit card fraud takes place over the online platform. Notably, the rise of the internet technology has made it possible for people to engage in e-transactions. The internet technology has further made it possible for third parties and fraudsters to have access to the internet’s resources. Some of these activities can be illegal such as in the case of identity theft which further facilitates instances of credit card fraud.
How the Internet Facilitates Credit Card Fraud
The internet facilitates and enacts credit card fraud. According to Hadar (2019), the internet is an example of a technological advance which has resulted to the loss of most credit card sales which are being handled electronically through the internet, phone or the computer. The information is processed within a matter of seconds. From the time people have turned to modern electronic processors, the number of credit card fraud has risen significantly, as most credit cards are being used fraudulently.
The internet has enacted the instances of credit card fraud by making it simpler for the fraudsters to provide a counterfeit of the credit cards (Hadar, 2019). Evidently, the criminals have been able to utilize technology easily to generate fraudulent versions of the cards. The internet has aided this scheme to become serious since some of the fraudsters have been able to sell magnetic strips available on the valid credit card. The magnetic strips contain all the information required by the fraudsters. The internet technology enables the fraudsters to creates fictitious cards and further use it on the computer system with ease. Additionally, it is also a fact that over the internet, no clerk is available to check the credit card transactions. As a result, the internet technology creates an anonymous atmosphere whereby the fraudulent credit cards can be easily be used hence making it easy for credit card fraud to be perpetrated (Hadar, 2019).
The internet has also enacted the instances of the credit card fraud since it ensures that the offender remains anonymous. In this case, an anonymous atmosphere is created which makes it easy to use the fraudulent cards to perpetrate the credit card crimes. The fact that the offenders have the ability to remain anonymous makes it possible for the fraudsters to engage in the credit card fraud since it will be difficult to establish and identify the person who carried out the crime for the criminal activity to be carried out. Looking at the reach and scope of the person carrying out the crime, it is evident that credit card fraud is conducted over the internet which has a wide outreach hence suggesting that the scope of the offense will be high.
Common Offender Methodologies
The people who carry out the credit card fraud are third parties whose identity remains anonymous. The perpetrators of the fraud have experience in different simple strategies which can be implemented to collect and disseminate credit card information. However, the improvements in the technology have forced them to switch gears with an aim of improving their processes over time.
The fraudsters have the ability to get personal information which aids in the credit card theft. Targeting the retailers using the internet is considered as the only way internet thieves can access the personal information of credit card owners. This knowledge makes it possible for the fraudsters to access the personal information which can be used to hijack a victim’s identity. The hijackers also have the potential for stalking social media users by sending phishing emails.
Risk Factors Associated with Victimization
Several risk factors are associated within victimization. Online merchants take all the risks in offering a way for the clients to make purchases through the use of their credit cards. In the events when there is a payment concern, the consumers have the potential of asking for their lost funds since the credit card company has made this a simple process. Therefore, it is evident that the business is the one considered as the party which faces the negative impacts of the fraud. Different people are likely to fall victims of credit card fraud. One of the most vulnerable groups includes people with a low skill level in engaging in online transaction and internet technology manipulation. Levi (2017) states that most credit card fraud victims are naïve since most of them fail to take requisite measures to protect themselves from the crime in the best way as it should have be. For instance, most of the credit card fraud victims fail to rely on the existing tools and techniques which can keep off the fraudsters to protect their personal information when engaging in online transactions. Levi (2017) reports that approximately 2.8 million cases of credit card fraud are reported annually and the strategies and the techniques put in place with an aim of protecting the credit card fraud are sophisticated daily to prevent this crime. However, most of the victims of the crime are not aware of the existence of the strategies and tools and how they can prevent themselves from the fraudsters.
The victims of the credit card fraud have also faced the credit card fraud mainly as a result of the psychological vulnerability facing them. Evidently, the credit card fraudsters are known to be experts in convincing people, through fake emails, to click on illegitimate links to ensure that crime is carried out. However, most of the people who fall in this trap are known to be highly vulnerable with most of them being inexperienced in establishing a fake email requesting for their personal credit details from the legitimate ones (Levi, 2017).
Responses to the Crime Problem
Law Enforcement and Regulatory Responses
Online fraud is associated with several problems to the society when it comes to aspects such as monetary losses and the devastating impacts experienced on the victims. Online fraud also poses drastic challenges to the legal enforcement agencies, when it comes to their ability to investigate complex crimes. This challenge is mainly experienced if the crime to be investigated is complex and exists within a virtual environment, international jurisdiction or those associated with low rates of reporting (Schultz & Birkelo, 2016).
Cybercrime law establishes the acceptable behavior and standards for the ICT users. Moreover, the law unveils the socio-legal sanctions for cybercrime, offers protection to the ICT users, and generally, it prevents people from the harm likely to arise as a result of the use of the ICT systems. The cybercrime law provides an indication of the standards of conduct rules and behavior which should be followed when it comes to instances of cybercrime laws. In the US, the Computer Fraud and Abuse Act (CFAA) cybersecurity bill was passed and enacted to prohibit instances of accessing computer details without proper authorization.
An innovative approach which involves establishing strategic partnerships between the government and the lobbying groups is considered as an effective move focused on addressing instances of fraud. The use of eSafety website has also been effective in curbing the crime rates by enabling online users to report identity theft cases and online scams. The site is also desirable since it offers details about how users can protect themselves from fraud.
Promising Crime Prevention Approaches
Situational Crime Prevention Theory
Situational crime prevention focused on the settings for the criminal acts without considering the characteristics of the offenders. It offers a practical approach focused on enhancing the safety as well as the challenges experienced when preventing crime. A situation crime prevention framework for intervention is focused on analyzing the problem through offering an intervention framework. Through the assessment of the opportunities where specific situations create a potential for crime perpetration, the situation crime prevention theory has established ways in which the crime can be prevented (Gilmour, 2016).
For instance, in the cases of credit card fraud, situational crime prevention theory guides that increasing the efforts which the offender should consider to perpetrate the crime are enhanced based on the existing situation. The situation can also be modified by enhancing the risks of the offender in completing the crimes. In addition, reducing the benefits and the risks that the offender expects is also a common methodology focused on reducing the crime. Moreover, doing away with the excuses that the offenders may utilize to justify their actions is also a fundamental move to be considered to address the crime. Additionally, reducing any form of provocations likely to result to crime (Gilmour, 2016).
Having in mind that the credit fraudsters are considered as sophisticated criminals, it is evident that online users should find effective ways of protecting themselves from credit card fraud. There are several actions which can be undertaken by the online users to ensure that they protect themselves from credit card fraud.
Relying on Federal Liability for Protection
One of the effective means is taking advantage of the existing federal liability protection is one of the fundamental ways of protection. Evidently, the Fair Credit Billing Act limits the liability that one experiences to $50 in the event when credit card theft occurs. Some of the banking institutions will also waive the stated amount in the cases where additional documentation is provided associated with the credit card fraud. This strategy is considered as effective since it relates to the situational crime prevention theory which relates to the modification of the situation. Notably, this strategy is focused on reducing the provocations likely to incite the offenders to engage in a criminal activity. Notably, the reduction of the charges required by the law discourages people from engaging in careless online transactions and reducing the potential that the online fraudsters will be encouraged to engage in crime (Anandarajan & Malik, 2018).
Focusing on privacy protection efforts
It is a fact that the credit card fraudsters relies on personal information to perpetrate their online fraud acts. Therefore, if online users rely on protecting their privacy details, it is evident that they are likely to reduce the potential for the offenders in carrying out the credit card fraud. One of the ways of privacy protection to be considered includes shredding pre-approved credit card offers as well as the documents which contain personal information. Additionally, a person should keep their wallet and purse in a safe place when in public place such as in a gym or at work. Moreover, it is also advisable that an online user should focus on using passwords on every account which is accessed by a smartphone or a computer. Additionally, it is advisable that one should use a password keeper app or program. Another way of privacy protection includes avoiding having passwords written down since they can be easily accessed by third parties who in turn use them to carry out criminal activities. By ensuring that the information remains as private as possible one avoids standing out as an easy target for the credit card fraudsters (Anandarajan & Malik, 2018). This strategy is in line with the provisions of the situation crime prevention theory which guides that increasing the efforts which the offender should make to carry out the crime is considered an effective consideration which can be considered to address the crime rates experienced. For instance, through the implementation of the strategies of protection one ensures that his/her private information is kept private thus making it difficult for the fraudsters to access them.
Utilizing Zero-Liability Credit cards in any possible case
The use of zero-liability credit cards is also considered a desirable strategy of protection which online users can consider to prevent instances of credit card fraud. When making unauthorized purchases, the credit card users can consider using zero liability cards. With this form of coverage, suffering from any loses becomes difficult as long as a credit card user reports any bogus charge events after they are experienced. This strategy will reduce the risk that the victims of the credit card victim experiences in the event of a fraud.
Regular Accounts Monitoring
Monitoring accounts regularly is considered as an effective strategy of preventing credit card fraud. This is mainly experienced in the event when one wants to take advantage of the federal liability protection or when one seeks to easily establish any instance of bogus transactions which further makes it easier to be verified. Additionally, checking credit report constantly is also considered as an effective consideration which online users should consider to avoid instances of fraud. The Fair Credit Reporting Act provides an indication that everyone is entitled to a free credit report which should be provided at least once annually. This make it easier to establish any unauthorized transactions which may have taken place without an account holder’s knowledge as well as the need to carry out requisite measures focused on preventing any further fraud cases, such as changing passwords. According to the situational crime prevention theory, making it difficult for the offender to carry out the crime is an effective way of ensuring that the online fraud is prevented such as changing passwords after realizing any form of unauthorized purchases.
Using common sense when relying on online shopping
Through the use of common sense when shopping online, it is highly likely that the online shopper will overcome instances of online credit card fraud. For instance, if one is engaging on an online shopping experience which includes paying through the use of credit cards, it is worthy to ensure that the computer used for the shopping is safe. One can achieve this factor through the use and installation of reliable and automatically updated software. Moreover, if a wireless connection is being used, it is also encouraged that the network should be secure to keep off third parties. When making online payments, it is advisable that one should only provide their credit card information over the secure websites only as reflected by the web address beginning with “https.” In addition, users should consider using passwords which are at least 10 characters in length. Through the implementation of the situational crime prevention theory, it is evident that this strategy will be effective since it is an approach which makes it difficult for the credit card offender to perpetrate the crime.
Using Credit rather than Debit Cards
The use of credit cards rather than debit cards whenever possible is considered as the best way in which one can protect themselves from online fraud. According to Gilmour (2016), the maximum loss which one can experience when transacting through the use of a debit card fraud is $50 noted within a period of two days after learning about the theft or loss or $500 if one reports the fraud between a period of two to 60 days after it is noticed. However, if one fails to report the fraudulent activity within a period of 60 days, one could lose the whole amount withdrawn from the account (Anandarajan & Malik, 2018). The use of credit cards prevents instances of such huge losses. According to the situational crime prevention theory, this is considered as an effective strategy of prevention in that the approach reduces the amount of benefits or rewards which the offender can obtain from the credit card fraud if the process goes through.
Online fraud is currently on the rise as a result of the advancement in technology. Credit card fraud is one of the common forms of online frauds experienced by online users. However, through the use of common prevention strategies guided by the situational crime theory, the situation can be effectively addressed through approaches such as using a credit other than a debit card for online transaction. Evidently, this reduces the amount of benefits the offender is likely to enjoy if the crime takes place.
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Anandarajan, M., & Malik, S. (2018). Protecting the internet of medical things: A situational crime-prevention approach. Cogent Medicine, 5(1) doi:http://dx.doi.org/10.1080/2331205X.2018.1513349
Gilmour, N. (2016). Preventing money laundering: A test of situational crime prevention theory. Journal of Money Laundering Control, 19(4), 376-396. doi:http://dx.doi.org/10.1108/JMLC-10-2015-0045
Hadar, M. (2019). Think your credit card is safe in your wallet? Think again. Washingtonpost. Retrieved from https://www.washingtonpost.com/business/think-your-credit-card-is-safe-in-your-wallet-think-again/2019/09/11/05e316e4-be0e-11e9-b873-63ace636af08_story.html
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Schultz, F., & Birkelo, S. (2016). Credit card fraud arrests made by Janesville police. TCA Regional News Retrieved from https://search.proquest.com/docview/1851385343?accountid=45049