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What is a credit card?
A credit card system is a type of retail transaction settlement and credit system, named after the small plastic card issued to users of the system. A credit card is different from a debit card in that the credit card issuer lends the consumer money rather than having the money removed from an account. It is also different from a charge card (though this name is often used to describe credit cards by the public) in that charge cards do not extend the user credit -- the charges must be paid each month in full. In contrast, a credit card allows the consumer to 'revolve' their balance, at the cost of having interest charged. Most credit cards are the same shape and size, as specified by the ISO 7810 standard.
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Credit card fraud
Mail Non-Receipt Fraud
Mail non-recepit fraud occurs when a thief intercepts a replacement card sent to the legitimate cardholder and uses it. However, many banks increasingly send out inactive cards that cannot be used until the legitimate account holder confirms his or her identity to the bank using Social Security number, home address, mother's maiden name, and the number on the card.
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Chargeback Fraud
Chargebacks occur when a cardholders credit card details are used to purchase items without their authorization. This generally involves online companies, who often cannot verify that the person entering the details on their site is the actual cardholder (i.e. Card-Not-Present activity). When the cardholder becomes aware of the activity they usually notify their bank, who are likely to refund almost all of the costs. These costs are then passed back to the company involved as a "chargeback", effectively a penalty for accepting the transaction without propoer verification of the purchasers identity.
Another type of chargeback occurs when a legitimate cardholder uses the card to purchase goods, or a service, and then when the statement comes, claims that they never authorised the transaction, or they never received goods or service ordered. This is also known as Cybershoplifting or first-party fraud.
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Skimming
is when an unscrupulous employee at a legitimate merchant takes a second copy of the card details magnetic strip before processing the payment through the official EPOS terminal. This copy of card details, is sold on the black market to fraudsters who clone the cards.
"*skimming" of magnetic stripe details has become slightly less prevalent after the introduction of CVV or CVS codes, which are not encoded on the magnetic strip, but are printed on the card - normally on the reverse of the card.
skimming of magnetic stripe details together with recording of PIN numbers entered into ATMs has been seen, where a small skimmer device that reads the magnetic stripe is attached to the card slot of an ATM, together with various devices to monitor the keypad, either by attaching a fake keypad over the genuine one, or by remote-controlled spy camera.
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Consumer debt
Consumer debt is debt that develops due to everyday expenditures. Some consider debt incurred for expenditures not considered investments in the economics sense as detrimental. Others feel that consumer debt can be beneficial when it helps increase demand for consumer products and thereby overall production. The most common form of consumer debt in industrialized nations are credit cards, payday loans, and unsecured lines of credit, often at higher than average interest rates.
Long-term consumer debt is often considered fiscally suboptimal. While some consumer items (automobiles, which are usually exempted in discussions of "consumer debt", and business suits) may be useful investments that justify debt, most consumer goods are not. For example, the expenditure in getting a big-screen television now (and thus incur high-interest consumer debt) rather than saving for it is usually not justified (in strict financial terms) by the subjective benefits of having the television early.
An alternative analysis might view consumer debt as a way to increase domestic production. If credit is easily available, the increased demand for consumder goods should cause an increase of overall domestic production.
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