Privacy, Security, and Fraud Protection — Types of Fraud

Types of Fraud

Account fraud—Account fraud happens when someone—anyone—uses your credit card or bank account information without your consent. It can happen if a card is lost or stolen, when a card statement or a “pre-approved” credit card offer falls into the wrong hands or if a credit number is stolen and used on its own or to make counterfeit cards. While it may be challenging to detect, most banks and credit card companies have numerous safeguards in place to help protect consumers and limit their liability to pay for unauthorized charges to their accounts.

Identity theft (“ID Theft”)—With ID theft, a thief gets access to highly sensitive personal information (like a Social Security Number (SSN) or a driver’s license) and uses this information to open accounts, take out loans or create a new identity in your name. In some cases the thief actually uses the information to create a new identity—opening new checking or credit card accounts, starting cell phone service, even taking out a mortgage, or renting an apartment. In other cases, the thief uses the information to access your existing accounts.

How does it happen?

Among the pieces of personal information that can be used to commit ID theft and fraud are your name, SSN, birth date, mother’s maiden name, credit report, driver’s license, and credit card and bank account numbers.

Thieves may obtain this information in basic ways, like stealing your wallet or rifling through your trash or by more sophisticated means, such as skimming machines or online scams.

Some of the “offline” methods used for stealing personal information include:

  • Theft of a purse or wallet—Stealing wallets and purses containing your driver’s license or ID card, Social Security card, credit cards, ATM cards, or other personal information 
  • Mail theft—Thieves target unattended mailboxes to steal bank and credit card statements, pre-approved credit offers, new checks, tax or medical information, or fill out a “change of address’’ form to divert your mail to another location.  
  • “Dumpster diving”—By rummaging through garbage cans, trash bins and dumpsters, thieves can get access to important data about you from discarded copies of checks, bank or credit card statements, or other records that typically show your name, address, or even your telephone number.    
  • “Vishing”—This telephone scam uses a technique called caller ID spoofing, which makes it look like calls are coming from a legitimate or known phone number. The calls generally use a recorded message that instructs you to call a Toll-free number. If you call, you’re then asked to enter in a credit card number or other personal information.   
  • Skimming—Thieves use small devices, known as “skimmers,” to capture and store credit and debit card information on a magnetic strip. Whether it’s someone using a handheld device or a fake ATM slot—the card is often first swiped through the legitimate machine, but then it is also secretly swiped through a separate device that captures the card number. The collected card numbers are then sold and are ultimately made into fraudulent credit or debit cards.   
  • “Shoulder surfing”—In this scenario, criminals watch you from a nearby location as you enter your ATM code or punch in an account number or listen in on your telephone call as you give your credit card number over the phone.

Identity fraud victims by type of fraud:1

  • Credit Card = 40.3%
  • Bank = 37.3%
  • New Account = 4.1%
  • Personal Information = 3.8%
  • Multiple Types = 7.6%
  • Other = 7.0%

How can I make online shopping safer?

Your online security depends on how well you protect your information. Watch this video for tips on safer online shopping.

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This site is for education purposes. The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any Capital One product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional.


Source: The National Cyber Security Alliance, November 2010