Obviously I can dispute charges, but is there any other failsafes that stop this? It just seems so odd that I casually give my CC number over the phone, often including the 3 numbers on the back.
In: Economics
The only things preventing people from stealing your card info in that manner is either morals, risk of losing their job, or prosecution. Losing a job or being prosecuted may sound like a big deal, but it’s incredibly rare. Many of them get away with it too. They only need the card number, expiration date, and 3 digit security code to make a purchase online, over the phone or physically clone a card (minus the chip). Many times the stolen cards are used to buy gift cards to further hide the theft because it’s expensive to track down thieves.
If the card info is stolen, the card companies have algorithms that can catch the card being used fraudulently such as out of ordinary spending or card used out of area or internationally. These algorithms are really advanced, more than I would care to explain in an ELI5 post.
The physical cloning is part of the reason for the push to chip cards. The card number isn’t stored on machines, and transactions done with magnetic strips carry more fraud liability for the stores than the card company. This incentive to use the chips pushes criminals to either shady merchants, big box retailers that just don’t care (e.g. walmart), or online purchases. This narrowing of potential places to purchase with a stolen card combined with the fraud algorithms I mentioned before help stop a lot but not all card fraud.
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