In 2023, the Federal Trade Commission (FTC) dropped some upsetting news: 2.4 million cases of fraud were reported in the U.S. alone in 2022. That’s not just a big number; that’s more like the population of a small country, all getting scammed each and every year. And financial fraud – including credit card fraud – isn’t going away anytime soon; in fact, it’s expected to keep rising.
But there’s a twist: when it comes to credit card fraud, the timeline of the fraud process can be in favor of the card holder. Contrary to belief, thieves aren’t in a rush to drain your bank account the moment they steal your card details. They’re much cleverer and more strategic than that. And that delay? It’s crucial. In fact, it can decide whether you end up as a victim or escape unscathed.
With the right strategy, time can be on your side; and time, we all know, is money; especially in this scenario. So, let’s dive into the timeline of credit card fraud and figure out why time is of the essence.
The Life and Times of Your Stolen Credit Card
Step 1: The Theft
When your credit card information is stolen, it starts off innocently enough: you swipe, dip, tap your card, or type in those precious digits without a care in the world. But somewhere out there, a criminal is scheming to steal your card information. Your card information can be stolen in many ways, and as soon as it is, that’s when the clock starts.
Step 2: The Dark Web
In some cases, a lone bad actor will try to use your stolen credit card number immediately, but that’s not all that common. More often, the person who steals the info wants to sell the info to someone else on the dark web. Not only does that keep the initial thief/hacker from being directly traced to the stolen card, but it can be easier and more lucrative for thieves to sell card data instead of using it themselves.
Of course, a single card’s stolen information isn’t worth the hassle of selling. Instead, your card’s information is bundled with hundreds or even thousands of other stolen card data and put up for sale on the dark web. This process can take a while: weeks or even months. And your card information can be bought and resold multiple times as the data changes hands around the more illicit corners of the internet.
Step 3: Testing Card Data
During this resale madness, various buyers will test the card information for viability. Card testing usually involves two methods. The first is putting small transactions that are easy to miss on the stolen card. Picture a thief ordering a $1 item on a random website, just to see if the card is still active. The second method is payment authorization, a sneakier move where a fraudster initiates a transaction to see if the card is connected to available funds. This kind of authorization doesn’t show up on your statement right away, giving the bad guys more time to exploit the stolen data.
Card testing is rarely a quick process, even after the time that passed while the card information was exchanged across the dark web. Sometimes, it drags on for months or even years, as thieves test and retest the card. There isn’t much data on how long the testing phase might last; anecdotal evidence ranges from weeks to years.
Step 4: Finally, the Fraud
Finally, your card data is sold to someone who will actually use it to make a purchase. On the black market, the stolen information of one credit card can sell for anywhere from $5 to $120, depending on what details are included. The more data they’ve got on you -- name, address, card security code -- the higher the price.
The final purchaser of your card’s details uses the information for credit card fraud, usually online. They’ve tested it, they’ve bought it, and now it’s time to cash in. This is when the fraudulent charges start piling up, because now it’s a real race against the clock to spend as much as possible before someone notices and freezes the account.
Step 5: You’re The Last to Know
Once either you or your bank notices the suspicious activity, the timeline of fraud concludes – though your nightmare may just be beginning. Cue the frantic calls, the canceled cards, and the endless back-and-forth with your bank’s fraud department. To you, it’s all happening right now, but now you see how long ago the crime actually happened.
All told, months or even years can pass between your card data being stolen and the first fraudulent charge appearing. And resolving the problem? That’s a whole other timeline and bundle of stress (see our piece on “zero liability”).
Why Timing is Everything
So, why is it important for you and your bank to understand the fraud timeline? Because it reveals just how outdated some of our current fraud protection measures really are. Take your card’s printed security code (aka CSC/CVV/CVC), the three-digit number printed on the back of your card that’s supposed to keep you safe. Because printed codes are static, they last for the entire life of your card - which could be years. Unless your card expires or gets replaced, that code doesn’t change, which gives fraudsters ample time to compromise the card.
In other words, even though the timeline of credit card fraud can take months, if your card data doesn’t change at all over that time, you can’t take advantage of that long fraud cycle.
Remember, card security codes were invented back when e-commerce was just a twinkle in capitalism’s eye. They were designed for phone transactions and printed, not embossed, so that those old-school "knuckle buster" carbon copiers couldn’t record them. A great fraud protection idea back then, but not the best for the modern world. Today those codes are often stored by your operating system or browser, just waiting to be compromised. It’s like relying on a dial-up modem in the age of fiber-optic internet -- it’s just not up to the task anymore.
The Hero We Need: Dynamic Security Codes
Enter the hero of our story: dynamic security codes. Think of these as the James Bond of credit card security -- suave, sophisticated, and always one step ahead of the bad guys. Unlike static security codes, dynamic codes change, making them much harder for thieves to exploit.
Some dynamic security codes are on a timer, which means they change at regular and predictable intervals, which is a step up from the static codes of yesteryear. However, even better is EVC (Ellipse Verification Code).
EVC makes the card security code relevant again, adapting to the fast-paced, ever-changing landscape of online fraud. Instead of lasting the entire life of your card, the EVC code changes with every tap or dip of your card. If you use your credit card as frequently as the average consumer, that security code will have changed multiple times by the time your stolen credit card information even hits the dark web.
Imagine being able to change your password every time you log in, except you don’t have to remember it, and it happens automatically. That’s the kind of protection we’re talking about.
So, in a sense, time is both your greatest ally and your worst enemy when it comes to credit card fraud. The longer it takes for your stolen data to be used, the more opportunities you have to catch the fraud before it does serious damage. But that same time also gives thieves the chance to slip under the radar, testing and retesting your card until they’re ready to strike.
That’s why updating our collective approach to fraud protection is so crucial. Static security codes are like landlines in a world of smartphones: outdated and insufficient. Dynamic security codes like EVC offer a level of protection that’s as fast paced and adaptable as the digital world we live in.
You can finally make sure that when it comes to credit card fraud, time is on your side.
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