• ATM CARD FRAUDS: SHARADA AVADHANAM
  

• What is Fraud?
• Fraud is a deliberate deceit which is planned and executed to deprive an individual or an organization of property, money or any other valuable security. Fraud must be committed with intent and includes actions of misrepresentation and/ or acts of omission.

• Total loss from frauds> Rs.5,000 million over last 5 Years.
• Maximum frauds in consumer products, Financial Services.
• Prime reason for frauds - Economic pressures, Lack of emphasis on prevention and MORE SOPHISTICATED CRIMINALS
• Profile of a Fraudster
• Male [92%]
• 26 - 40 years old [62%]
• Income between Rs. 1,00,000 - 2,50,000 [35%]
• Period of employment - 2 to 5 years [37%]
• Sources of Frauds
• Service providers
• Suppliers
• Management
• Employees
• Customer
• Others
• How were frauds discovered
• Internal controls
• Anonymous letter
• Accident
• Employee notification
• 3rd party investigation
• External audit
• Others
• Retail Financial Products
• Finance to Individuals.
• Housing Loans
• Vehicle Loans
• -Cars
• -Two -Wheelers
• -Commercial Vehicles
• Consumer Durable Loans
• Personal Loans
• Credit Cards

• Home Loans - Features
• Loans for individuals for the purchase or construction of a house.
• Applicant submits loan application and supporting documents like Income Proof, Bank Statement, Age Proof, residence Proof and Signature Verification.
• Loan secured by deposition of title deed with loaning agency [e.g. Bank]
• A legal stamped loan agreement between the borrower and lending agency [e.g. Bank, LIC Housing Finance etc.]
• Mode of repayment - Post-dated Installment cheques issued by the borrower.
• Valuation of property done prior to disbursement.
• Home Loans-Types of Frauds With IPC section
• Types of Fraud.
• Title not clear
• Fake Income Docs
• Previous mortgage.
• If registered Mortgage
• If equitable mortgage
• IPC
• 470,471,468,423 & 420
• 417, 418, 420 &471

• 406 & 420
• 406
• Vehicle Loans
• Loans for individuals for the purchase of a new car or used car or a new two- wheeler.
• Loans to Fleet operators for the purchase of commercial vehicles.
• Applicant submits loan application and supporting documents like Income Proof, Bank Statement, Residence Proof and Signature Verification.
• Loan secured by Hypothecation of Registration Certificate with lending agency

• Invoice and Insurance Certificate to mention Hypothecation with lending agency
• A legal stamped loan agreement between the borrower and lending agency
• Mode of repayment - Post-dated Installment cheques issued by the borrower.
• Valuation of asset done prior to disbursement in the case of used cars.
• Vehicle Loans
  - Types of Frauds With IPC section.
• Types of Fraud
• Producing false documents
• ITR/Proof of Residence
• Fake RC Book
• No HP entry in RC
• Credit runaway
• Sale of Mortgaged Asset
• IPC

• 467,468,466,477A-
• 471,474,418 & 417
• 406 & 420
• 406 & 420

• Consumer Durable Loans - Features
• Loans for individuals for the purchase of white goods, PCs. and Air-conditioner.
• Applicant submits loan application and supporting documents like Income Proof, Bank Statement and Residence Proof.
• Invoice to carry ICICI’s name.
• 
  
• Delivery Challan mentioning product serial number to be sent to ICICI.
• A legal stamped loan agreement between the borrower and ICICI clearly mentioning the product.
• Mode of repayment - Post-dated Installment cheques issued by the borrower.
• Consumer Durable Loans
  -Types of frauds with IPC section
• Types of fraud
• -Dealer Fraud
• Non existing customer
• Assets not delivered
• Cash disbursement
• -Customer Fraud
• Customer not traceable
• Selling assets
• False documents

• IPC

• 419 & 406

• 420 & 406
• 420 & 406

• 420 & 406
• 420 & 406
• 467, 468, 466, 477A
• 471, 474, 418 & 417
• Personal Loans:
  -Features
• Loans to salaried individuals and professionals for the purposes like child’s education, marriage, medical expenses or professional purposes.
• Applicant submits loan application and supporting documents like Income Proof, Bank Statement, Residence Proof, Proof of Qualifications and Signature Verification.
• A legal stamped loan agreement between the borrower and lending Agency
• Mode of repayment- Post-dated Installment cheques issued by the borrower.
• Personal Loans
  -IPC Types of frauds with section
• Types of fraud
• -Fake documents:

• Proof of residence
• Fabricated Identity
• Producing Fake Degree
• Producing Fake Income Docs
• Customer Absconding
• IPC
• 467,468,466,477A, 471, 474,418 &417

• 420 & 406
• Action of Frauds
• Identify the persons responsible
• filing of cases under section 406, 420 and Cr..PC section156
• Investigate Fraudulent Cases
• Identify points of compromise
• Identification of the persons responsible
• Interrogation of the persons identified to find out the other accomplices.
• Identify if any professional gang of frauds has been working
• Tracing a missing asset or absconding customer.
• Credit Card
• What is a Credit Card?

• An alternative card based payment system for goods and services in lieu of cash
• Credit Card Systems
  - Transaction Terminology
• Charge Card:

· Issuer extends line of credit to consumer

- terms of repayment

• + monthly installments
• + full amount payable
• 
  
• Credit Card:

§ Issuer extends line of credit to consumer

- terms of repayment

§ + monthly

§ + minimum amount payable

• 
  
• Debit Card:

§ Linked to direct debit account (e.g. savings) from which transaction is paid immediately.

• Card Payment Systems
  Card Company Structures
• Visa & Master Card=Associations
• Own trademark
• Operate electronic network to exchange transaction data.
• Licensee financial institutions to issue cards to consumers and contract with merchants to accept cards owned by licensees.
• American Express = Single Company
• Diners Club = combination

- Citibank owned DC branches

- Franchisees

• JCB = Single Company
• [JCB:Japanese Credit Branch]
• Credit Cards
  Players and Processes Involved
• Master Card / Visa
• Transaction Terminology
• Issuer

• Acquirer

• Authorization

• :Issues credit or debit card to the consumer

• :Contracts with merchant to accept credit or debit cards

• :Request for Issuer
• approval for specific
• transaction
• Settlement
  

• Terminal
  

• Floor Limit
• : Issuer pays acquirer

• : Merchant device to
• process transaction
• electronically

• : Amount below which
• a merchant need not
• seek authorization.
• Credit Cards
  Transaction Authorization Process

• Over 35 lakh in India.
• Credit Cards
  -Type of Frauds an overview
• ISSUER FRAUDS
• fraudulent application
• Lost and Stolen cards
• Card not recvd / intercepted
• first party fraud
• account take over fraud
• employee fraud
• software generated Cd Nos
• counterfeit Cards

• ACQUIRER
• Fraudeulent ME application
• Merchant Fraud
• Multiple Imprints
• Sold Paper
• POC pumping

• Credit Cards
  -Type of Frauds
• Fraudulent cardholder applications What is Involved?

• When a card application is made using data which is intended to mislead the issuer into believing that the applicant is worthy of receiving a card
• Fraudulent cardholder applications
• Individual or organised - misrepresenting some material facts like salary on application or using details of other persons.

• Possibly result of card centre’s lax screening or internal collusion.
• Application Fraud
  - Controls
• Concentration of applications with same handwriting, from same postal code etc.
• Misspellings of commonly used names of persons, addresses and businesses
• Telephone prefix versus address
• Employer telephone number missing
• Age inconsistent with salary
• False or altered information, financial or personal
• Lost / Stolen cards
  - Definition
• A lost card is one that the rightful cardholder reports as lost.
• A stolen card is one that the rightful cardholder reports as stolen.
• Once the card is lost or stolen a fraudster uses it to obtain merchandise, services or cash.

• Lost / Stolen Cards
  - Characteristics
• Fraud usually takes place within 24 hours.
• Often sold to counterfeiters for re-embossing/ re-encoding.
• Sometimes involves cardholder participation.
• Losses represent approximately 47% of all frauds.
• Lost/Stolen Cards
  - Controls
• Cardholder education
• Card is as important as any other personal document like identity card- Your identity card can be assumed by another
• treat card as cash
• card to be returned after usage
• don’t write PIN on card
• encourage prompt reporting of any loss or theft
  

• Card not Received / Intercepted
  -Definition
  

• A card despatched to a cardholder is intercepted in transit and then used fraudulently.
  

• Card not Received / Characteristics

• Unsigned card[signature comparison becomes worthless]

• Longer activity period before identification.
  

• Card not Received / Intercepted
  -Risk Points
  

• Internal - distribution centre
• Postal staff - sorting / delivery
• Transportation staff - bulk delivery
• Opportunities - mailbox theft

o -misrepresentation

• Card not Received / Intercepted
  - Control
• New, replacement and/ or renewal cards to be sent via registered mail, or other secure means or arrange for cardholder pickup.
• No recipient other than addressee acceptable
• Follow-up with call or mail to confirm receipt
• Card activation programmes -card activated only upon cardholder confirmation of receipt
• Send PIN separately
• First Party Fraud
  -What is involved?
• When a cardholder denies ever receiving a new or replacement card when he in fact has, or lodges a false lost / stolen report.
• -Continues to spend on the card and subsequently disputes the charges
• When a cardholder sells his card to a third party and lodges a lost / stolen report and disputes the charges on the card.
• Skimming Today
  -Detection and Availability
• Easily moved or passed between individuals
• They are small, light and easily concealed.
• Can be sent by post or courier anywhere in the world quickly and cheaply.
• Only be used several hours per single location.]
• Mass production ensures a ready supply and cheap cost.
• Skimming
  -If you recover a skimming Device
• Don’t ask someone to demonstrate how the device worked using the device devices have innocuous self destruct mechanisms that delete all memory
• Don’t press and hold buttons down when on, or when turning the device on.
• Do recover all cables, dongles, plug packs, cards[even non credit cards], CDs, floppies, fax machines and personal computers including printers and printouts.
• Do record what instructions someone was given to operate the device, but do not try this on this device.
• Also look out for
• Plastic cards[may be found in transit unaccompained by persons]

• -with / without embossing
• -with / without printing on card face front or back
• -with / without magnetic stripes
• Sales Drafts or transaction Receipts
  

• -reveal where, when and what purchases were made

• Written notes notes bearing names and numbers [loose leaf sheets or notepad]
• Also look out for
• Notebook computer and diskettes [may contain account numbers or account generating software]
• Related computer paraphernalia [cables, connectors etc.]
• Point - of - sale [POS] terminal units
• hand phones
• Plastic carde printing equipment [desktop plastic card printer, paint, proofs etc.]
• Plastic card finishing equipment [embosser, encoder, hot-stamping machine, magnetic tape, metallic foil etc]

• Skimming Controls
• Merchant staff must verify the identity of any terminal vendor who make maintenance or service calls.
• Merchant staff must be vigilant to the presence of any suspicious - looking devices connected to the POS equipment
• Merchant management may consider adopting tracking staff who handle card transactions
• Action on Frauds
  -Police help requested
• Investigate Fraudulent cases
• identify points of compromise
• Identification of the persons responsible
• Interrogation of the persons identified to find out the other accomplices.
• Identify if any professional gang of frauds has been working
• Tracing a missing asset or absconding customer.
• Recovery of the product / dues from customer/ user.
• Arrest of the persons responsible.

::-o-::