Difference between revisions of "Carding Fraud"

Revision as of 21:54, 27 January 2023

Carding refers to a type of fraudulent activity involving the theft and unauthorized use of credit cards. Typically, carding involves using the stolen card to purchase prepaid gift cards or other merchandise that can be resold. The term "carders" refers to criminals who engage in carding related activities.^[1] The Nilson Report states that "Gross fraud losses to issuers, merchants and acquirers of card transactions from merchants, as well as acquirers of card transactions from ATMs reached $28.65 billion" in 2019, and that 33.57% of these losses came from the United States. These losses do not include the costs of fraud prevention and detection to retailers.^[2]

Carding Methods

Carding begins with carders obtaining card numbers and other information that allows them to impersonate the card holder. There are a variety of methods used to acquire card numbers and other information.^[3]

Online forums & Marketplaces

Forums and Markets on the Web as well as hosted as hidden services on the dark web provide carders with resources as well as opportunities to buy and sell stolen credit card information.^[4]

Skimming

Skimming is the technique of modifying point of sale devices to steal data. This is commonly done with an overlay terminal that reads data from the magnetic strip on credit cards. Overlay terminals are designed to fit over, and appear like, a regular point of sale device as to avoid detection. Popular skimming targets among carders include card readers in stores, gas pumps, and ATM machines.^[5]

Data Breaches

Credit card information can be leaked after retailers that store payment data become victims of hackers. In 2014, large U.S. based retailer Home Depot suffered a data breach due to hackers using custom exploits to gain access to their payment data. The breach exposed the information of over 40 million customers.^[6] Estimates for the total sales of personal information on the dark web is roughly one billion dollars per year. This information can be used to take over financial accounts. ^[7]

Social Engineering

Social Engineering encompasses practices involving deceiving and manipulating card holders or businesses to gather information. One case of carders employing social engineering occurred at a Hilton Garden Inn in Dallas Texas when the carders called hotel guests and pretended they were a hotel employee verifying credit card numbers after a computer issue. ^[8] There are many other ways that carders can use such as Email or text, usually involving impersonating a trusted institution.^[9]

BIN Attack

BIN or Bank Identification Number is used to indicate what financial institution a credit card belongs to.^[10] A BIN attack is where carders use a valid BIN number to generate lots of random credit card numbers, then test these numbers to find valid numbers. Generally, computers are used to automate the generation and testing of the card numbers.^[11]

Background

Prevention

Merchant Mitigations

Due to substantial losses, merchants employ numerous strategies to make carding fraud difficult, and detection easier. Card processors use Address Verification Systems so that merchants can check provided billing addresses against the billing address on file with the issuing bank. ^[12] This strategy makes it more difficult for carders, but can be circumvented by using social engineering or other methods to get the correct billing address. CVV security codes also add additionally security to transactions. CVVs are used to verify that the purchase was made by the real card owner. ^[13]

Card Holder Mitigations

Ethics & Legality

In the United States, the Fair Credit Billing Act protects card holders that fall victim to carding fraud from paying more than $50.^[14] Much of the losses from carding fraud fall on card issuers, about 68.39% of worldwide gross losses. The rest mostly harms merchants. ^[15] While much of the monetary costs do not fall on the consumer, some loss mitigation practices create challenges for card holders too. Merchants using Address Verification Systems can require card holders to update their billing address after a move. ^[16] In addition, card issuers may require fraud claims to be disputed due to chargeback fraud. Chargeback fraud occurs when a card holder requests a chargeback for a purchase they made themselves. This leads to card issuers investigating fraud claims, and legitimate cases of fraud may not be resolved immediately or correctly. ^{[citation needed]}

See Also

References

1. ↑ https://www.investopedia.com/terms/c/carding.asp
2. ↑ https://nilsonreport.com/mention/1313/1link/
3. ↑ https://www.forbes.com/advisor/credit-cards/how-credit-card-information-is-stolen-and-what-to-do-about-it/
4. ↑ https://eprints.soton.ac.uk/413441/1/Final_Paper_After_Acceptance.pdf
5. ↑ https://abcnews.go.com/GMA/News/video/credit-card-skimming-crimes-rise-96656884
6. ↑ https://www.reuters.com/article/us-home-depot-cyber-settlement-idUSKBN2842W5
7. ↑ https://nilsonreport.com/mention/1313/1link/
8. ↑ https://www.nbcnews.com/id/wbna43662080
9. ↑ https://lifelock.norton.com/learn/identity-theft-resources/what-is-carding
10. ↑ https://www.investopedia.com/terms/b/bank-identification-number.asp
11. ↑ https://www.ascentra.org/learn/news-blogs/article/2022/07/26/credit-card-fraud-bin-attacks
12. ↑ https://www.investopedia.com/terms/a/address-verification-system.asp
13. ↑ https://www.americanexpress.com/en-us/credit-cards/credit-intel/what-is-cvv/?linknav=creditintel-cards-article
14. ↑ http://uscode.house.gov/view.xhtml?req=granuleid%3AUSC-prelim-title15-chapter41-subchapter1-partD&edition=prelim
15. ↑ https://nilsonreport.com/mention/1313/1link/
16. ↑ https://www.investopedia.com/terms/a/address-verification-system.asp