Credit Card debts: Causes and Prevention

Debt results when a client of a credit card company purchases an item or service through the card system and accumulates and increases via interest and penalties when the consumer does not pay for the money he or she has spent. Unaffordable credit card debt is a heavy burden.

Causes

The low security of the credit card system presents countless opportunities for fraud. Identity theft is the most common way in committing fraud. It is done by stealing Id’s, Credit cards and checking accounts so they can access into finances. One of the most dangerous threats is the spyware. Spyware can be used to gatherall types of confidential information and the user usually has no idea the information is being taken. It spies the access everything you do online including usernames, passwords, online shopping purchases and e-mail or chat correspondence. Another fraud is phishing which is designed to steal your identity. It is carried out by sending spam e-mail that appears to come from websites such as bank or Credit Card Company.

The fraudster will then use the stolen identity to do purchasing or apply for loans. It causes the client to go in debt even they did not make any transactions or could not even use the account. However, it may be worse when it comes to physical identity theft such as stolen wallet or stolen mail.

Example of phishing.

Prevention

To reduce online threats, it is a now common practice to require a shipping address to match the billing address on the credit card. It is used as a security measure to minimise fraudulent purchases as thieves who may steal the account number will not have access to the billing address. There is a need to contact the concerned bank or company and confirm the email which is sent. It is critical to monitor the credit report on a regular basis. Clients should use only one low-limit credit card for online transactions. It is important to watch the monthly billing statements for errors or unusual activity. Anti-virus as well as anti-spyware should be updated regularly. Lastly, users have to change passwords often to avoid theft.

There are also third party systems in place for ensuring online credit card security. VeriSign's SSL (Secure Sockets Layer) technology is the leader in the field. It can be used to encrypt information to nearly un-guessable number of possible combinations of codes.

Other methods to prevent online payment fraud include:

• Address Verification Systems - The system will check the billing address of the credit card provided by the user with the address on file at the credit card company.

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• Card Verification Number - Possession of the physical card number is needed in order to use the card even if someone gets possession of the credit card numbers.
• Fraud screens and decision models - Use various automated rules which merchant can easily change to reflect changing trends in the fraud.

Overcoming past identity theft is necessary to save your self from hassle because if you become an identity theft victim you will fight for the rest of your life to restore what is rightfully yours with little if any help in between.