Payment Card Fraud

It covers lost and stolen cards, counterfeit cards made from skimmed data, cards obtained with false applications, account takeover and online use of stolen details. Debit and prepaid cards are included, although the liability can differ, since a debit card draws directly on the customer's money. Chip and PIN reduced counterfeit and stolen-card fraud at terminals, and criminals moved towards online, phone and remote purchases. Issuers detect misuse with real-time scoring, spending-pattern models and alerts to customers, and they block suspicious payments. Merchants carry some risk through chargebacks, and the card networks set security standards. Who bears the loss, whether cardholder, merchant or issuer, depends on how the card was used and on the scheme rules.

A customer's wallet is stolen on a train. Within an hour, the thief tries three contactless purchases and a large cash withdrawal at an ATM. The issuer's system notices the unusual sequence and declines the withdrawal. The customer receives an alert, blocks the card through the app, and the bank refunds the contactless purchases made before the block.