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.
In: 548
it’s either not as easy as you think it is, or there are fewer criminals than you think.
Also, think of the massive profits they are making to afford to cover fraud!
tldr; businesses and payment processors pay for fraud, not banks or customers.
Odd i didn’t see any responses talk about chargebacks and who is liable as the answer.
When fraud happens on a card, the card holder can file a charge back (or dispute) with the card issuing bank. The way credit cards work is that a dispute is paid for by the merchant with whom the transaction was made. In cases of fraud, most card holders win these disputes. If a merchant has so many disputes that they go bankrupt – the payment processor they use is held accountable. Payment processors have very advanced machine learning algos used to detect card fraud and merchant fraud[1]
[1] Merchant fraud is when a bad actor signs up to process payments and either uses stolen cards to cash out or never fulfills orders.
I sold consumer fraud alerting solutions to large banks a few years ago, and by far the most prevalent pushback was “we don’t want our customers to know how much fraud occurs on their accounts” – a huge amount of fraud is recognized by the banks, who then eat the cost and do not post it to customer billing accounts.
PCI compliance helps. Fairly strict security requirements are enforced on major sellers. They undergo annual audits by a third party as well. Banks also have tons of tools to identify and stop fraud.
Credit cards charge the vendor 2-3% of the transaction. They pay maybe 1-2% back to the consumer as “rewards” or “points”. That leaves them with 1-2%. Since 28% of all payments involve cards, they basically take in 0.5% of that part of the economy. And they then collect interest. Look at [finviz.com](https://finviz.com) and count how many companies are larger than V or MA. Not a lot. Their costs are very low. So, like any business, they plan on having a certain amount stolen from them. This cost is simply passed on to you. They would rather have cards be really, really nice to use and have a lot of theft than minimize theft and have cards so unpleasant to use that people opt for other means. Especially since they don’t bear the cost.
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Having worked for one of the biggest credit card issuers in the space, I can assure you that fraud is enemy number one.
Fraud may be the only thing that can bring a major carrier down. They are all doing everything they can to identify and mitigate fraud risk, and their success will determine their overall outcome.
Data science, behavioral science, you name it.
The average credit card balance in the US is $6K. The interest banks are getting far outstrip the fraud.
Also keep in that a lot of fraud is committed by family members and if the victim does not file a criminal report than they remain liable for the charge.
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