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SYNOPSIS ON

CREDIT
CARD
PROBLEM

FRAUDS

FOR BANKS

Prepared by: Naveen Bhatt

INTRODUCTION
Credit Card Fraud is one of the biggest threats to business establishments today.
However, to combat the fraud effectively, it is important to first understand the
mechanisms of executing a fraud. Credit card fraudsters employ a large number of
modus operandi to commit fraud. In simple terms, Credit Card Fraud is defined asWhen an individual uses another individuals credit card for personal
reasons while the owner of the card and the card issuer are not aware of
the fact that the card is being used. Further, the individual using the card
has no connection with the cardholder or issuer, and has no intention of
either contacting the owner of the card or making repayments for the
purchases made.
Credit card frauds are committed in these ways :-

an act of criminal deception, from the unauthorized account.


Illegal or unauthorized use of account for personal gain.

Misrepresentation of account information to obtain goods and/or services.


OBJECTIVES
Objectives of the study are :

To study the sate of credit card industry.


To study the different types of frauds.
To study how fraudsters take advantages of weakness.
To study Impact of fraud on credit card issuers, merchants,
holders etc.
To study losses due to fraud, total cost due to frauds.

Conclusion

As card business transactions increase, so too do frauds. Clearly, global


networking presents as many new opportunities for criminals as it does for
businesses. While offering numerous advantages and opening up new
channels for transaction business, the internet has also brought in increased
probability of fraud in credit card transactions. The good news is that
technology for preventing credit card frauds is also improving many folds with
passage of time. Reducing cost of computing is helping in introducing
complex systems, which can analyse a fraudulent transaction in a matter of
fraction of a second. It is equally important to identify the right segment of
transactions, which should be subject to review, as every transaction does
not have the same amount of risk associated with it. Finding the optimally
balanced total cost of fraud and other measures outlined in this article can
assist acquiring and issuing banks in combating frauds more efficiently.

Need

and

scope

of

study

Card spends grew 28% year-on-year (y-o-y), up from 24% last year, stated a
recent report by Worldline, an electronic payment services company. Consumers
spent Rs.1.9 trillion through credit cards and Rs.1.2 trillion through debit cards.
The report, India Card Payments Report for 2014-15, shows other such trends
seen in the past year in the use of credit and debit cards across channels like
ATM and point of sale (PoS) terminals. Here is a look at some of these trends
seen in the financial year (FY) 2014-15. "According to the data maintained by the
Reserve Bank of India (RBI), a total number of 10,048, 8,765, 9,500 and 9,362
cases of credit cards, ATM/debit cards and Internet banking frauds were reported
during 2011-12, 2012-13, 2013-14 and April-December 2014, respectively,"
Minister of Communications and IT Ravi Shankar Prasad said in a written reply to
the
Lok
Sabha.
This resulted in losses of Rs 38 crore, Rs 68 crore, Rs 78 crore and Rs 60 crore
in 2011-12, 2012-13, 2013-14 and April-December 2014, respectively, he added.
"The losses incurred in these cases were to the tune of Rs 3.25 lakh and USD
337,962.

Research methodology
The research would be conducted on the basis of secondary data. All the
information related to credit card frauds and credit card industry will be gathered
and analyzed to understand how and why the frauds are made.
For this study information will be collected from:

Public and private banks sites.


News and media
Text books
Articles and publications

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