To understand credit and debit card fraud, you need to be aware of all the different words used to talk about credit cards, financial institutions, and fraud. If you bump into words you don’t know while exploring our site, check out this glossary. These are some of the most common words you should know when reading about credit and debit card fraud.
- Account Holder — Sometimes called the card holder, the account holder is the person who owns the account attached to the credit or debit card.
- American Express — A multi-national financial services company, American Express (also known as AmEx) issues credit cards, gift cards, rewards cards, business services, insurance, and more. In most cases, AmEx is the card issuer and processor, but in rare cases, the company cobrands with other companies such as with the Amazon AmEx for small businesses.
- ATM Card — An ATM card allows consumers to make deposits and withdraw cash from an automatic teller machine (ATM). Often, account holders have a debit or credit card that works in an ATM, rather than just having an ATM card. If a card is exclusively an ATM card, it does not feature a Visa or Mastercard logo and cannot be used to make purchases in person or online.
- Authorized Transaction — An authorized transaction is a debit or credit card transaction (purchase, ATM withdrawal, etc.) for which the merchant receives authorization from the bank that issued the card. Also called card authorization, preauthorization, or preauth, this process requires the merchant to dispatch key details about the transaction and the card (amount, account number, PIN, etc.) to the issuing bank. The bank may deny the transaction for lack of funds, incorrect PIN, or other issues. If the bank authorizes the transaction, the funds get put on hold until the transaction falls off or gets settled.
- Billing Fraud — When a thief uses a stolen card to make fraudulent transactions online, they may be prompted to enter the billing address. If they use the cardholder’s correct billing address, that constitutes billing fraud.
- Card Fraud — Card fraud refers to any type of fraud using a debit or credit card. This type of fraud can involve stealing existing credit or debit cards, taking credit or debit card numbers, or opening new cards using stolen information.
- Card Holder — The card holder is the person whose name appears on the card. This term is interchangeable with account holder.
- Card Issuer — The card issuer refers to the entity that issued the card. That may be a bank, a credit union, a credit card company, or another type of financial institution.
- Card-Not-Present (CNP) Fraud — This type of card fraud does not involve the card being present. The thief may have stolen either the card or the number, but in either case, they use the number for online transactions.
- Card Number — The card number is usually a 16-digit number that identifies the card to the bank. When card holders make a purchase online, they type in these numbers, and when they do a transaction in person, the magnetic strip or chip in the card relays the card number or similar information to the card reader.
- Chargeback — When someone disputes a charge on their credit or debit card statement, the merchant may have to refund the charge. This is called a chargeback.
- Credit Card — A credit card is a plastic card that allows the cardholder to buy items on credit. In some cases, people have cards linked to their bank accounts so that the amounts from the card get debited automatically from their current account. Although these aren’t strictly credit cards, they function like credit cards and are processed by merchants like credit cards.
- Credit Card Fraud — Credit card fraud refers to any situation where a thief fraudulently uses someone else’s credit card or number, including cases where the scam artist opens a new account.
- CVV — Short for card verification value, CVV is a three-digit fraud-prevention security code printed on the back of a credit or debit card, usually in or near the signature field. Merchants usually request this code to process card-not-present transactions online or over the phone.
- Cybercrime — Crimes that take place online are cybercrimes. There is an intersection between card fraud and cybercrimes, as a lot of identity theft, credit card fraud, and debit card fraud starts online or takes place online.
- Debit Card — Debit cards connect to a checking account, and you can use them anywhere credit cards are accepted. Most debit card transactions require a PIN and the funds are withdrawn immediately from your checking account to be transferred to the merchant’s account.
- Debit Card Fraud — This includes any type of fraud perpetrated with a debit card or involving the number of a debit card.
- Discover — Issued by Discover Financial Services, the Discover card disrupted the credit card industry during its 1985 introduction with unusually high credit limits and no annual fees. Discover is an issuer and a network, meaning the company only issues its own cards rather than allowing financial institutions to issue the cards like Visa and Mastercard do.
- Electronic Funds Transfer Act (EFTA) — The EFT Act is a set of federal laws related to electronic funds transfers using debit cards, ATM cards, and automatic bank withdraws. The act outlines consumer and financial institution liability related to debit card fraud.
- Embossed Card — A credit or debit card with an account number or other payment details embossed on the card, so that you can feel them and take a physical impression of the card.
- EMV — Short for Europay, Mastercard and Visa, EMV refers to computer chips embedded in cards all over the world. These chips produce a one-time authorization code for credit card transactions which reduces card fraud at the point of sale because the reader doesn’t transmit all the card’s details and the access code can only be used once.
- Fair Credit Billing Act (FBCA) — This set of laws outlines fair billing practices for credit cards, charge cards, and other open end credit accounts, and it also includes laws related to liability for credit card fraud.
- Financial Device — Any instrument such as a credit card, a debit card, and electronic funds transfer, or a stored value card linked to a bank account or affecting the financial situation of the cardholder. Legislation often uses this phrase to ensure they cover all types of card fraud related to present and future payment methods.
- Fraud Detection — Fraud detection refers to using tools and processes to detect credit card fraud, identity theft, and other types of fraud.
- Fraud Prevention — This includes using tools and processes to prevent fraud before it happens.
- Fraud Liability — Fraud liability defines who is liable (financially responsible) for card fraud. With card fraud, the cardholder, the card issuer, or the merchant may be liable for losses.
- Hologram — A security feature added to some credit cards that contains several layers of images at different angles to create the illusion of motion, holograms make cards hard to copy.
- Identity Theft — Stealing someone’s name, Social Security Number, and other identifying details to take over bank or credit card accounts or to open new accounts in someone’s name is identity theft.
- Issuer Identification Number (IIN) — The IIN is the first six digits of a payment card which indicate the type of card and the issuing bank. Previously called a bank identification number (BIN), these numbers start with a “4” for Visas and a “5” for Mastercards, and the next five digits vary based on the issuing bank.
- Magstrip — Short for magnetic strip, a magstrip is the strip on the back of a credit or debit card which contains the account number and other identifying details for point-of-sale transactions.
- Mastercard — This is a multinational financial services company that processes transactions on Mastercards issued by a range of banks, credit unions, lenders, and other financial institutions.
- Merchant Agreement — This agreement is a contract outlining the relationship between a business (merchant) and a credit card processor.
- Personal Identification Number (PIN) — A four- to six-digit secret code used to verify ATM cards and debit cards for point-of-sale and ATM transactions.
- Point-of-Sale (POS) Fraud — Card fraud that occurs at the point of sale. For instance, if someone buys items in a store with a stolen credit card, that constitutes point-of-sale fraud.
- Primary Account Number (PAN) — The account numbers associated with a credit or debit card.
- Security Code — Sometimes called a CVV, a security code is a series of numbers printed on the signature panel of a credit or debit card. Mastercard, Visa, and Discover have three-digit security codes, while American Express cards feature four digits. The code helps with authentication when making card-not-present purchases.
- Settlement — Most credit and debit card transactions feature a two-step process involving preauthorization and settlement. During preauthorization, the funds are put on hold, and then, the final amount gets withdrawn from the account during the settlement process.
- Shipping Fraud — When a scam artist uses a stolen credit or debit card to purchase items online or over the phone and have the items shipped to them.
- Signature protected card — A credit or debit card where the signature works to verify the cardholder.
- Tokenization — The single-use codes produced by EMV chips are called tokens and tokenization refers to the process of using these tokens in place of the card’s primary account number.
- Visa — A multinational financial services company that processes payments of cards with the Visa logo, issued by banks, credit unions, lenders, and other financial institutions.
Now that you understand the most essential vocabulary related to credit and debit card fraud, you need to start protecting your financial institution, and to do that, you need a quality partner who understands fraud. At SQN Banking Systems, we make fraud detection, prevention, and protection easy for our clients. To learn more about our products and solutions, contact us today.