Understanding Credit Fraud, Its Various Forms and How to Prevent It

August 21, 2023


In most parts of the world today, the term "Credit fraud" has taken different names like "Cardsharper" in the United States, "Yahoo Yahoo" in Nigeria, "Sakawa" in Ghana, "Fullz" as can be loosely searched on the Internet, amongst others. Even though the names differ, the meaning everywhere has remained the same. 

Credit fraud also known as credit card fraud or payment card fraud is a type of financial fraud that involves the unauthorized use of someone else's credit card or credit card information to make fraudulent transactions. As a term, it is used by criminals to describe sets of stolen personal information that can be used to impersonate someone or to use their bank cards.

This kind of fraud is among the most common types of fraud. As technology improves, so do the methods used by fraudsters to steal money and  personal information from victims. As a matter of fact, recorded overall fraud attempts in Nigeria increased by 187% between 2019- 2022.

Credit card fraud is one of the fastest growing forms of identity fraud. This is why it is important to understand what  credit fraud is, its various forms and how to prevent such from happening. In this article, we would explain in detail what credit card fraud is, its various forms and explore ways on how you can protect yourself. 


Credit card fraud comes in different forms. It can be done online, over the phone, by text or in person. Victims can get defrauded by emails, have your information stolen in a data breach or have your cards stolen. The first step in preventing this from happening is understanding the various types of credit card fraud. 

Stolen Credit Cards: In this kind of fraud, criminals steal physical credit cards or the information printed on them, such as the cardholder's name, card number, and expiration date. They then use this information to make purchases or withdraw cash.  

Account Takeover: Just as the name implies, after credit cards have been stolen, scammers then proceed to call the credit card company pretending to be the card holder. This fraud is done in a bid to take over the account and have access to it. They then change passwords and pin numbers.

Application Fraud: Criminals use stolen personal information (name, address, birthday, and social security number) to apply for credit cards. This type of fraud can go undetected until the victim applies for credit themselves or checks their credit report. While the victim will typically not be responsible for any purchases made with fraudulent credit card accounts due to protection offered by the cards, this type of fraud can damage the victim's credit score.

Card-Not-Present Fraud: In this scenario, the fraudster uses the credit card information without physically possessing the card. This often happens in online transactions, where the card details are used to make purchases without the need for the actual card.

Card skimming: Criminals can use skimming devices to capture credit card information from unsuspecting victims when they swipe their cards at compromised ATMs, gas pumps or point-of-sale terminals.

Phishing: Fraudsters may use phishing emails or fake websites to trick individuals into revealing their credit card information, login credentials or other sensitive data.


It is impossible to completely protect yourself from credit card fraud, there are some steps you can take to minimize your risk of becoming a victim.

  • Never provide personal or financial information in response to emails, texts, or phone — even if it looks like it's coming from a company you do business with. .
  • To protect yourself from skimming, avoid suspicious card readers, like ones with sticky keypads or that seem to be haphazardly attached to an ATM or gas pump.
  • Hide your PIN and account number from bystanders and store employees when using your card in person.
  • Don't let mail sit in your mailbox for an extended period of time. It's not just credit cards themselves that thieves can steal, but also financial statements. Since these contain your name, address, and account number, it gives thieves a head start in CNP scams. 


The first indication that suggests you have been a victim of credit card fraud is unauthorized or suspicious charges. It is important you go through your monthly statements carefully to make sure there are no charges for things you didn't buy — or withdrawals you didn't authorize. Receiving a credit card statement for a card you didn't apply for is another way you could find out you've been scammed.

Many credit card companies are proactive about detecting fraud and often contact cardholders if they detect suspicious activity. However, it's never wise to provide information on any unsolicited phone calls. Instead, hang up and call your credit card company back and ask if there are any issues with your account.



If you discover fraudulent transactions — or if your card is lost or stolen — contact your credit card company immediately to report the fraud. Ask them to cancel or suspend your account. They will tell you how to destroy any existing cards and when you'll receive replacement cards.

You can also file a police report by contacting your local police. In most cases, local authorities aren't equipped to handle credit card fraud cases. However, some creditors require police reports as part of their investigation into your fraud claim.



After you have contacted your credit card company and filed a police report, you can further protect yourself and start the recovery process by doing this 

  • Check Your Credit Report:  It's wise to check your credit report for credit inquiries or accounts you don't recognize even if you haven't been a victim. This will help you catch any fraudulent activity that may have  slipped through the cracks. If you have been a victim, it's even more important to check your report regularly. You can get a free credit report from Kredete today. This helps you keep an eye on their accounts.

Unfortunately, there's no way to completely protect yourself from credit card fraud. But guarding your personal information and checking your statements are typically your best lines of defense.

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