Are Credit Card Phone Fraud Scams on the Rise?

Signs That Phone Based Card Scams are Causing New Problems

Nov 10, 2009

How to Avoid Credit Card Phone Fraud, Rotorhead

Lenders & consumers have become more aware of online fraud scams & fraudsters are turning back to credit card phone fraud. What warning signs should consumers look for?

According to Financial Fraud Action UK there are signs of an increase in phone based credit card fraud. This kind of issue has died down in recent years due to a mix of consumer awareness and to the online opportunities that diverted fraudsters. There has been, however, an increase in phone scams in recent months that have caused many consumers significant fraud and ID theft problems. What is happening here?

Types of Credit Card Phone Fraud Scams

Fraudsters are aware that consumers are a little more savvy about what they should and shouldn't do with their credit cards and security details over the phone nowadays. So, they've made moves to counteract this by changing the way that they operate.

Recent phone scams appear a little different to the norm. Fraudsters may, for example, call up consumers and pretend to be their bank, card company or the police. The spiel here is that there has been some kind of fraud on the card already and they are calling to sort it out.

This involves them telling the card holder that they need their card and their PIN number urgently and that they will be sending a courier to collect it from them. Once they get both the card and the number that will allow them to withdraw cash, then they simply take out as much money as they can.

Why do People Fall for This Scam?

Fraudsters often target vulnerable people and their spiel here is designed to make it look like they are helping. People often fall for this scam because:

The fraudster may claim to be from the security division of the card company or bank or from the police.
They may openly say that they can't take the PIN over the phone (as per common banking practice) so have to have it sent.
They scare the card holder into worrying about being de-frauded.
They may be willing to give a number on which the individual can call them back to check them out.
They use regular courier services that people will recognise.

These are relatively sophisticated methods compared to previous phone based credit card fraud scams. The problems that they cause may, however, be much worse. Voluntarily giving a card and its PIN to a stranger may well leave the card holder with no protection or avenues for compensation once the fraud is discovered.

How to Avoid Credit Card Phone Scams

Avoiding this kind of scam is far better than having to deal with the consequences. Consumers should:

Never give or hand over their card and PIN in this way. A card company or bank won't ask for it as they have other security measures that can be used if they need to verify ID.
Not assume that the fact that a reputable courier turns up to collect the card/PIN makes it OK. The couriers are being used without knowing what they are picking up or what is going on.
Not call the number that a fraudster gives to check that they are who they say they are. This will invariably be a set-up. If in doubt hang up, find a card statement and call the bank/card company on that number to see if they have been trying to get in touch about a problem.

Bear in mind that this is just one type of credit card fraud and it may also be worth looking at general card fraud protection tips to make sure not to be caught out by other scams.

Source: "Banking Industry Warns About a Growing Card Fraud Scam" (Financial Fraud Action UK, online press release accessed 10/11/09)

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