Fraud

Fraud or Fraudulent Transaction constitutes any unauthorized or deceptive transaction wherein an individual’s or organization’s payment or identity information is illicitly acquired and misused for unauthorized transactions or purchases. This malicious activity is orchestrated by individuals or groups seeking financial gain through unauthorized access to sensitive information.

Common instances of payment fraud include payment card fraud, identity theft, and account takeover. Fraudsters use various techniques, including phishing, skimming, and hacking, to gain access to personal information. A consequential outcome of these unauthorized transactions is a chargeback, wherein the victimized individual or organization disputes the transaction with their financial institution, seeking reimbursement. Chargebacks serve as a mechanism to protect consumers from fraudulent activities, allowing them to reclaim lost funds. However, they pose challenges for merchants, as excessive chargebacks may lead to financial penalties and damage to their reputations.

Effective prevention measures against payment fraud involve robust security protocols, including encryption, multi-factor authentication, and real-time transaction monitoring.