Defining Fraud

What is Fraud?
In the credit card world, fraud is generally defined as any transaction that was not made by the cardholder, and these transactions can occur in a number of different ways.

MasterCard’s Definitions:
Lost or Stolen Card: You, the cardholder, are no longer in possession of your card after having "lost" the card at an unknown place or time, or after realizing that your card was "stolen" from your purse or wallet, home, office, etc. Fraud occurs when the lost/stolen card is subsequently used without your permission.

Non-receipt:
You did not receive a new or replacement card that was sent to you by your issuing bank. You may have no idea that the card went missing until you receive a statement listing transactions not made by you.

Fraudulent Application:
Your personal information is used to apply for a credit card. This may include your name, address, SIN, and date of birth. This type of fraud is often difficult to detect until the issuer receives a complaint from the consumer or the account goes into collections shortly after having been issued. If you’re not a customer of the bank that issued the card, you may not know a card has been issued in your name until you apply for credit elsewhere and are denied because of a poor credit rating.

Counterfeit:
You’re in possession of the card issued to you by your bank, however transactions appear on your account statement that were not made by you. This could be an indication that a counterfeit card bearing your account number is in circulation and is being used at the same time you’re making legitimate purchases.

Account Takeover:
You’re in possession of your card and somebody posing as the cardholder "takes over" the account by requesting a replacement card on the same account, usually to be mailed to a different address. You would not have any knowledge that this has been done until you receive an account statement showing transactions not made by you or you fail to receive your monthly account statement.

No Card Present:
You’re in possession of your card and somebody has made transactions using the card number only, as in the case of mail orders, phone orders, or Internet transactions. You may not know this has been done until you receive an account statement showing mail/phone order or online transactions not made by you.

Other:
There are other scenarios that are classified as fraud, but don’t fall into the described categories. An example would be the theft and subsequent use of balance transfer cheques, which you may or may not have ordered from your bank.

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