e-Commerce organizations across retail and other consumer services have continued to experience massive growth in online transactions but a new fraudulent scheme, “Card-not-Present (CNP)” has had the financial regulator; institutions; and law enforcement agencies stand in awe.
The rise in this crime is exacerbated by the inability of banks to disclose and share information of related fraudulent cases with one another.
The absence of legal framework against electronic fraud has not helped matters. That is why daily there are reports of Nigerians whose accounts have been mysteriously emptied by fraudsters with this scheme.
In its simplest form “Card Not Present” fraud involves the unauthorized use of a credit or debit card number, the security code printed on the card (if required by the merchant) and the cardholder’s address details to purchase product or services in a non-face-to-face setting.
In many cases, the victims maintain possession of their card and are unaware of the unauthorized activity until notified by a merchant or they review their monthly statements.
Most CNP fraud takes place on the Internet and merchant never physically inspects the credit card, thus the term “card not present”.
Merchants release goods or render services with the understanding that the cardholder authorized the purchase and will make the required payments.
CNP fraud is the work of criminal enterprises and works with the help of an insider.
They work by infiltrating legitimate corporations with the intention of using their employment as a means to access customer and credit card information, which can then be used to commit CNP fraud.
Once a criminal possesses the credit card number and potentially the cardholder name and address they have the necessary information to attempt CNP fraud.
Criminals use a variety of methods to gain access to credit card data, validate that the cards are active and circulate the cards to perpetrate CNP fraud.
One of the ways is called skimming which is the theft of credit card information by a dishonest employee of a legitimate merchant, by manually copying down numbers, or using a magnetic stripe reader device.
There is also phishing , a criminal activity whereby fraudsters attempt to acquire sensitive information, such as credit card numbers and so on; as well as carding, a term used by criminals for a process they use to validate stolen credit card numbers.