Credit Card Fraud: Types of Scams

Credit card fraud has become one of the most prevalent forms of financial crime, especially with the increasing use of digital payments. Scammers are looking for different methods to make unauthorised payments by stealing your credit card information.

In 2022, the state of Bihar in India reported the highest number of credit and debit card fraud cases. Additionally, Forbes reports that credit card fraud cases increased to 12,069 involving ₹630 crore during the period of April-September 2023-2024.

Therefore, this blog explains the types of credit card scams, common signs to identify if your card is at risk and the steps you need to avoid falling victim to a credit card scam.

What are the Types of Credit Card Scams?

Skimming

Scammers place a skimming device on the credit card swiping machine. With this process, scammers will take your card information when you swipe the card for legitimate use. Additionally, skimming occurs through various methods, including physical skimmers, PIN capture, digital skimming and data misuse.

Phishing

Phishing occurs when scammers persuade you to provide your sensitive data by tricking you into clicking on unauthorised links. In short, this is a form of human hacking in which the fraudster aims to gain sensitive information. Similar to skimming, this also involves obtaining your account credentials, credit card information and passwords from unreliable messages.

Hacking

Hacking is a serious cybercrime in India. This process also includes the illegal acquisition and the use of sensitive card information for unauthorised transactions. In this scenario, you need to report the incident immediately to the National Cyber Crime Reporting Portal for further assistance. 

Card Not Present (CNP)

Card Not Present (CNP) fraud occurs when scammers misuse stolen card details, such as the CVV, card number and expiration date, to make online purchases. This typically occurs over the phone without the physical card being present.

Credit Card Application Fraud

Credit card application fraud is a type of fraud where the fraudster uses stolen or synthetic information to apply for a credit card with no intention of repaying the debt. Scammers, after getting the card, maximise the limit and then disappear. Moreover, this is a form of identity theft that affects the victim.

Account Take Over Fraud

Account Takeover Fraud occurs when a cybercriminal gains access to the user’s login credentials. Fraudsters mainly break into your registered bank account digitally and gain access to the broader category that involves information related to your credit card.

Cloned Cards

Cloned card fraud is a type of credit card fraud in which the scammer makes use of the credit card and further uses it for fraudulent purposes. This is the most commonly practised by scammers through card skimming, where a device is secretly used to steal and copy the sensitive information.

Dumpster Diving

Dumpster diving is method scammers use to commit credit card fraud and identity theft as they rummage through discarded trash to find documents containing personal and financial information.

Keystroke Capturing

You have clicked on a malicious link, which can install malware on your device. This malware further copies your keystroke activities and copies your credit card password to make unauthorised purchases.

Common Signs that your Credit Card is at Risk

Below are some of the common signs through which you can identify that your credit card is at risk:

Unexpected or Unrecognised Changes

Look for transactions you do not remember making. If you see even a small amount deducted from your account, it is a sign that your credit card has been hacked. 

Alerts for Purchases You Did Not Make 

Take immediate action when you receive messages and OTPs related to unfamiliar purchases.  This is a sign that your card is at risk; thus, contact your bank immediately.

Card Decline

If the card issuer suspects that a transaction is fraudulent by analysing your typical spending habits, they might decline it. Moreover, scammers also use this method to collect card information from multiple cards by having you re-enter the card details various times.

Changes to the Account Settings

These are some of the common ways through which you can identify that your card has been at risk.

Exceeding Your Credit Card Limit

Exceeding your credit card limit is also a sign of credit card fraud. It indicates that someone has gained access to your card and is using it for unauthorised purposes. In this situation, your credit card issuer notifies you to make sure you are aware of the problem. 

These are some common signs that help identify when your credit card is at risk. Thus, to add an extra layer of security, Cyber Insurance plans in India are crucial against the financial, legal and reputational damages resulting from cyber-attacks and data breaches.

Steps to Report Credit Card Scams

Now that you understand the types of credit card fraud and the signs indicating you are a scam victim, the first thing you should do is to learn how to report these scams. The steps you need to follow include:

1. Contact your credit card issuer immediately.

2. After you have raised a complaint, change your credit card passwords. 

3. Search for the option to enable two-factor authentication in your bank’s mobile application.

4. Lastly, notify your insurer and, upon their advice, complete the insurance claim form.

5. Monitoring your credit card activity is also a crucial long-term measure.

Moreover, to protect yourself from any further damage resulting from a credit card fraud incident, it is important to take steps beyond reporting to your card issuer and policy insurer. In this situation, freeze your card through the bank’s mobile app and file a police report if the fraud is worse.

How to Protect Yourself from Credit Card Fraud?

Below are some of the factors that you need to take into account to prevent your credit card’s sensitive and personal information from falling into the wrong hands:

1. Never write down your credit card passwords and account information on paper.

2. Never share your card details with any strangers.

3. Create passwords with strong and alternative characters.

4. Regularly change your passwords.

5. Only use secure “https://” websites.

6. Stay alert if you receive any messages or calls asking you to share your card confirmation, especially if they impersonate someone from your bank or financial institution.

7. Damage old bills and documents with your credit card information before discarding them.

8. Avoid making payments over public Wi-Fi connections.

9. Do not save your credit card passwords and information on websites.

10. Regularly check the transaction details listed on your credit card statement.

Why Cyber Insurance is Important to Prevent Credit Card Scams?

Cyber insurance is important since it provides coverage for financial losses resulting from cyber incidents.

The number of cybersecurity incidents has increased rapidly. From ₹10.29 lakh in 2022, it rose to ₹22.68 lakh in 2024, and as of February 28, 2025, ₹36.45 lakh was reported on the National Cyber Crime Reporting Portal.

Companies like Bajaj General Insurance shield you in the digital universe with their Individual Cyber Safe Insurance policy, starting at ₹ 1 per day.

Key inclusions include

1. Coverage for digital theft of funds

2. Identity theft

3. Privacy breach and data breach liability

4. Phishing cover

Additionally, other coverage benefits include

1. No upfront payment is required for the covered claims.

2. Get comprehensive coverage with no sub-limits.

3. Extend your coverage to include family members.

4. The premium for a sum insured of ₹50,000 starts with ₹365 annually.

How Can a Credit Card Scam Affect You?

Credit card fraud can affect you in numerous ways, and you can face significant consequences, such as:

1. Draining your account and further leading you to long-term financial debt.

2. Failing to monitor the account regularly can eventually negatively impact your credit card scores. 

3. The process of a credit card scam, including identifying and reporting the scam can create emotional stress for you.

4. The significant amount of loss in credit cards due to credit card fraud can affect your day-to-day activities.

5. If your stolen card information is used for illegal purposes, it can cause you reputational damage.

Thus, these are some of the factors indicating how a credit card scam can impact you, beyond just losing the amount.

A credit card can be a necessity in your everyday life. Therefore, staying vigilant about the types of fraud, common signs, and purchasing the best available Cyber Insurance plans in India, offered by Bajaj General Insurance, is a smart move that will keep you protected.

Final Thoughts

Credit card fraud is drastically evolving. However, having knowledge of its types and the most common signs, along with a high level of alertness, can help you avoid falling victim to it.

Thus, stay alert and double-verify the details before making any online transaction with your credit card. If you notice any unfamiliar transactions, contact your card issuer immediately. Thus, by combining personal vigilance and safety tools such as cyber insurance, you will stay informed and aware of falling into the wrong hands.

Frequently Asked Questions

How is credit card fraud investigated?

Credit card fraud is investigated through various processes. Banks and authorities examine transaction history, device logs, IP addresses and merchant details to track how and where the fraud has occurred. If the card is used for any illegal purposes, law enforcement can also be involved in the investigation.

How do banks detect credit card fraud?

Banks use fraud detection systems that identify unusual transaction patterns, risky transactions or logins from unknown sources. However, banks and financial institutions currently use AI and machine learning models to detect fraud quickly and analyse financial data in real-time to detect exactly when and where the fraud has taken place.

Can I get my money back if I fall victim to credit card fraud?

In this situation, you need to contact your bank or your credit card insurer. Inform them about the fraudulent charge. After that, you can request to receive your money by proving your identity. After that, ask them to reverse the transaction and refund your money. However, in most scenarios, the bank usually refunds your money, provided it was not your fault.

What is the meaning of counterfeit credit card fraud?

A counterfeit credit card is a fraudulent imitation of a legitimate card, often stolen by a scammer to make unauthorised purchases. Counterfeit credit card fraud mainly occurs when the scammer copies the data presented on the magnetic stripe.

What is the RBI policy on credit card fraud?

If credit card fraud occurs due to the customer's negligence and is reported within 3 days, the customer holds zero liability. However, if the reporting time exceeds that, the customer will be capped at ₹10,000 with a credit card limit of ₹5 lakh and ₹25,000 with a credit card limit above ₹5 lakh.

What happens if you lie about credit card theft?

Falsely disputing a credit card charge is considered fraud. If you lie about credit fraud or theft, you may face legal consequences, including fines and court costs. Moreover, your bank or financial institution can blacklist you. In short, if you lie about credit card theft, you lose out on banking facilities.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making any related decisions.

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.