I come from a country where most people don’t have a credit card.
I cannot wrap my head around [this](https://m.youtube.com/watch?v=vmh3_nSR1jU) documentary.
Now I get that credit card fraud *is* a big problem.
But if all you need is the card number to order stuff, and card numbers are so easy to come by as shown in the documentary, then why is not every single criminal in the US running a credit card fraud operation?
It seems super easy and low risk. Get a burner device, order stuff from public wifi, and don’t be stupid about the delivery locations.
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As to your headline, banks chargeback the merchants for the fraud. Banks have extremely limited risk
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While credit card fraud is a problem, it’s not overwhelming to banks.
Just like stores expect some shoplifting and include the costs of that in their prices, banks expect some fraud and include those costs in the fees they charge.
Banks also have lots of ways to detect fraud, and can often catch it before there are too many charges. They have algorithms that look for charges outside a customer’s normal area, at places they don’t normally shop, etc. When I’ve had a fraudulent charge, the bank itself has always been the one to catch it and call me.
Also, you need more than a credit card number to shop. In person, you need the card itself. If a store runs just the number off a piece of paper, they would be liable for the charges. Spoofing cards is harder, especially the new chip cards. Online, you typically need the security number from the back of the card and the billing address. You can buy full sets of stolen data, of course, but it’s harder than straight numbers.
As to why every criminal in America doesn’t take up credit card fraud, on the whole a lot of crime is opportunistic rather than carefully planned. Someone needs money *now*, so they smash a window or bump key a door, grab some stuff, and leave. Or rob someone in person. Credit card fraud takes start-up capital (to buy the devices and numbers), planning, and patience.
Because USA is a backwards country. Fraud is paid for by merchants who pay high interchange fees as “insurance” against fraud.
In Europe if you want to use a card online you need access to the correct phone (stealing someone’s phone number is generally harder here too) as well as information not on the card. Interchange fees are lower and fraud is lower. It just relies on motivation in the correct places.
Because interest on credit cards is huge, easily over 10%/yr. Especially in the US many people don’t pay off their their credit card bill every month, but just pay a fixed amount. This means credit card issuers get to charge interest, which brings in a lot of money for them.
This also explains why many people in the US try to get out of this spiral by trying to completely pay off their credit card debt. It’s real easy to fall into the trap of almost only paying off interest every month, which means it is very hard to get out of depth.
I think the rules around consumer credit (so also credit cards) are much more relaxed in the US, so people can also get into trouble by getting multiple expensive credit cards. Banks and other issuers (like big shopping franchises) keep offering these to people who can’t really afford them because of this. The people involved are more likely to let debt accumulate, and thus interest payments. Which is very lucrative.
I personally think this sort of easy credit should be heavily regulated, Fwiw.
merchants generally won’t ship things to unverified addresses, so not being stupid about delivery locations is out the window
First, it’s not as easy as it sounds in countries with regular card use (cameras, tracking systems, bank algorithms that prevent buying, second verifications, claims, etc,.) it will probably be easier in places like yours where it’s not so widespread and prevention is not a priority yet.
Second, there are many ways to prevent it. In spain some banks issue cards with no data, literally blank bank cards and all your details are in your phone app. You can create a one off virtual card for purchases. You can use multiple accounts to prevent fraud (this is oldstyle) like keep the money in an account with no access by card and move the money to you card linked account only for what you need.
Third, banks are more than aware, but it’s the same issue as with shoplifting. Since it’s impossible to truly stop it, the “expenses” caused by it are embedded in the clients payments (account maintenance for example) and unless the issue blows out of a certain proportion, they consider it just collateral damage, “part of doing business”
I have worked for a few major US banks and they calculated around 50 million dollars in loss due to fraud for 2022. And I don’t think that’s including the money they pay their fraud prevention teams that stop a lot of losses as well. So overall it’s part of the budget sadly and also there are a fair amount of preventative measures in place to stop potential fraudulent transactions etc.
I work with a credit card monitoring vendor which is one of many defenses against card fraud that card issuers employ. Many cards posted for sale on card markets are caught quickly and invalidated before any major charges can be made on them. The vendor also conducts research with the card issuers to pin point where cards are being stolen from so they can monitor other cards previously used at that location.
Though despite this, credit card companies make so much money they are still simply able to just eat the cost of successful fraud much of the time.
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