A credit card has been defined as a payment card, the holder of which is permitted under his contract with the issuer of the card to discharge less than the whole of any outstanding balance on his payment card account on or before the expiry of a specified period, subject to any contractual requirements with respect to minimum or fixed amount of payments.
The card permits the holder to obtain credit up to a stated maximum amount from the issuer upon the card's presentation to a merchant. The card issuer sends the card holder periodic statements (usually monthly) describing the purchases made. The cardholder may settle the indebtedness without interest by paying the entire amount on receipt of the statement or the cardholder may settle the indebtedness by installments, paying interest on the outstanding amount.
Credit card fraud is a wide-ranging term for theft and fraud committed using a credit card or any similar payment mechanism as a fraudulent source of funds in a transaction. The purpose may be to obtain goods without paying, or to obtain unauthorized funds from an account. Credit card fraud is also an adjunct to identity theft.
We may define credit card fraud as-
"When 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".
Transactions completed with credit cards seem to become more and more popular with the introduction of online shopping and banking. Correspondingly, the number of credit card frauds has also increased with the introduction of newer technology. From embossers to encoders to decoders, credit card counterfeiters are now using the latest technology to read, change, and implant magnetic information on counterfeit credit cards.
Credit card frauds are committed in the following ways-
(1) An act of criminal deception (mislead with intent) by use of unauthorized account and/or personal information.
(2) Illegal or unauthorized use of account for personal gain.
(3) Misrepresentation of account information to obtain goods and/or services.
Courtesy:- Legal Point Foundation