Definition of Credit Card Fraud
Credit card fraud is the use of a credit card with the intent to commit fraud. It can be committed with a person's personal card, with a business card, a stolen card or a counterfeit card.
Personal Credit Card Fraud
Committing credit card fraud with a personal credit card usually involves charging items to the credit card and then later claiming that the charges were made by someone else (thus not requiring the owner to pay for the item as the card is reported stolen) or charging items to an expired or cancelled credit card. When items are charged to an expired or cancelled credit card, the credit card company is not required to pay the charge, and the consumer often can't be tracked down to pay for the item later.
Business Credit Card Fraud
Business credit card fraud usually involves employees who have been approved as a designated signer on the business card. Employees commit fraud by paying for their own personal items with the company credit card and having the company pay for it. Employees usually do this discreetly, charging low-priced items to the card that accountants won't notice. Occasionally they will charge large-ticket items to the card before leaving the job and moving, leaving the employer without a way to contact them to hold them accountable for the charges.
Stolen Credit Card Fraud
One of the most common types of credit card fraud is stolen credit card fraud. This occurs when one person steals another person's credit card and makes charges under that person's name. Thieves can steal the actual card, steal the credit card number to use in online transactions, or intercept the credit card in the mail before the owner ever receives it.
Counterfeit Credit Card Fraud
Counterfeit credit card fraud occurs when someone creates a counterfeit credit card with fake numbers and a fake name and then charges items to the fake card. Because this card isn't linked to any actual account, the credit card company is not responsible for the fraudulent charge and the company who received the charge has no one to pay for the charge.
Penalties
The United States Secret Service is the main entity that investigates and presses charges against people for committing fraud. The penalties for credit card fraud vary based on the offense and the amount of charges that were incurred, and include fines of up to $10,000 and prison time for as long as 20 years.
