Fraud is one of the most crucial ethical concerns in the credit card industry (Delamaire, Abdon, & Pointon, 2009). Fraud can occur with any type of credit products, such as personal loans, home loans, and in retails. Delamaire, Abdon, & Pointon (2009) defines fraud as means of obtaining services, goods and/or money in a dishonorable manner, and is a growing problem globally. Fraud deals with issues concerning criminal cases that are difficult to classify (Delamaire, Abdon, & Pointon, 2009). According to Bertke (2013) fraudsters have long posed a threat to perform fraudulent activities in retail outlets and the rise of mobile devices and other technologies are now serving as a gateway for fraudsters looking to take advantage …show more content…
In South Africa, credit card fraud has been depicted as one of the worst breaches of customer card data to date (Mahomed, 2013). However, to combat credit card fraud in retails effectively, it is important to first understand the mechanisms of performing a credit card fraud in a retail outlet (Bhatla, Prabhu, & Dua, 2003). This chapter will explore the different types of credit card fraud activities performed in retail outlets and where credit card fraud occurs in South African retail outlets. This discussion will include the personnel responsible for performing each fraudulent activity and the mechanism employed.
3.2 Types of credit card fraud performed in South African retail outlets
Credit card fraud has taken many procedures, from fraudsters using embezzled credit or debit cards to purchase goods or services to a more sophisticated problem of these fraudsters alerting with the security features (Budhram, 2012).Although technology may advance, the battle to combating credit card fraud continues as fraudulent people continue to poke and prod at the card industries weak spots (Budhram, 2007).These credit card fraudsters are very creative group of people. Hence, they have been able to side step almost every fraud prevention measures created in the card industry (Budhram, …show more content…
According to Schneier (2011) credit card fruad at point of sale occurs due to customer mischief or merchant (or employee) mischief. Customer mischief is where the customer makes use of a credit card that has been stolen or lost at a retail store, to purchase goods and services at the expence of the actual cardholder (Sherwood, 2008). Merchant or employee mischief is where the merchant/employee skims the customers credit card, at point of sale, using a card skimming device in order obtain card data and use it for personal benefit. This is also called the merchant collision (Bhatla et al, 2003). Shewood (2008) further mentions that merchant/employee mischief can also occur where the merchant/employee eavsdrop the customers PIN and after the transaction, perposely retains the customers credit card with the hope that the customer will forget the card. An illustration ,by Mehan (2012), of the positions of a customer and the merchant/employee when performing a transaction is dipicted in the figure