The Ultimate Guide to Credit Card Fraud Detection

by Julie Lee 5 min read July 23, 2024

In this article…

With debit and credit card transactions becoming more prevalent than cash payments in today’s digital-first world, card fraud has become a significant concern for organizations. Widespread usage has created ample opportunities for cybercriminals to engage in credit card fraud. As a result, millions of Americans fall victim to credit card fraud annually, with 52 million cases reported last year alone.1

Preventing and detecting credit card fraud can save organizations from costly losses and protect their customers and reputations. This article provides an overview of credit card fraud detection, focusing on the current trends, types of fraud, and detection and prevention solutions.

What is credit card fraud?

Credit card fraud involves the unauthorized use of a credit card to obtain goods, services or funds. It’s a crime that affects individuals and businesses alike, leading to financial losses and compromised personal information. Understanding the various forms of credit card fraud is essential for developing effective prevention strategies.

Types of credit card fraud

Understanding the different types of credit card fraud can help in developing targeted prevention strategies. Common types of credit card fraud include:

  • Card not present fraud occurs when the physical card is not present during the transaction, commonly seen in online or over-the-phone purchases. In 2023, card not present fraud was estimated to account for $9.49 billion in losses.2
  • Account takeover fraud involves fraudsters gaining access to a victim’s account to make unauthorized transactions. In 2023, account takeover attacks increased 354% year-over-year, resulting in almost $13 billion in losses.3,4
  • Card skimming, which is estimated to cost consumers and financial institutions over $1 billion per year, occurs when fraudsters use devices to capture card information from ATMs or point-of-sale terminals.5
  • Phishing scams trick victims into providing their card information through fake emails, texts or websites.

What is credit card fraud prevention and detection?

To combat the rise in credit card fraud effectively, organizations must implement credit card fraud prevention strategies that involve a combination of solutions and technologies designed to identify and stop fraudulent activities. Effective fraud prevention solutions can help businesses minimize losses and protect their customers’ information. Common credit card fraud prevention and detection methods include:

  • Fraud monitoring systems: Banks and financial institutions employ sophisticated algorithms and artificial intelligence to monitor transactions in real time. These systems analyze spending patterns, locations, transaction amounts, and other variables to detect suspicious activity.
  • EMV chip technology: EMV (Europay, Mastercard, and Visa) chip cards contain embedded microchips that generate unique transaction codes for each purchase. This makes it more difficult for fraudsters to create counterfeit cards.
  • Tokenization: Tokenization replaces sensitive card information with a unique identifier or token. This token can be used for transactions without exposing actual card details, reducing the risk of fraud if data is intercepted.
  • Multifactor authentication (MFA): Adding an extra layer of security beyond the card number and PIN, MFA requires additional verification such as a one-time code sent to a mobile device, knowledge-based authentication or biometric/document confirmation.
  • Transaction alerts: Many banks offer alerts via SMS or email for every credit card transaction. This allows cardholders to spot unauthorized transactions quickly and report them to their bank.
  • Card verification value (CVV): CVV codes, typically three-digit numbers printed on the back of cards (four digits for American Express), are used to verify that the person making an online or telephone purchase physically possesses the card.
  • Machine learning and AI: Advanced algorithms can analyze large datasets to detect unusual patterns that may indicate fraud, such as sudden large transactions or purchases made in different geographic locations within a short time frame. Advanced algorithms can analyze large datasets to detect unusual patterns that may indicate fraud, such as sudden large transactions or purchases made in different geographic locations within a short time frame.
  • Behavioral analytics: Monitoring user behavior to detect anomalies that may indicate fraud.
  • Education and awareness: Educating consumers about phishing scams, identity theft, and safe online shopping practices can help reduce the likelihood of falling victim to credit card fraud.
  • Fraud investigation units: Financial institutions have teams dedicated to investigating suspicious transactions reported by customers. These units work to confirm fraud, mitigate losses, and prevent future incidents.

How Experian® can help with card fraud prevention and detection

Credit card fraud detection is essential for protecting businesses and customers. By implementing advanced detection technologies, businesses can create a robust defense against fraudsters. Experian® offers advanced fraud management solutions that leverage identity protection, machine learning, and advanced analytics. Partnering with Experian can provide your business with:

  • Comprehensive fraud management solutions: Experian’s fraud management solutions provide a robust suite of tools to prevent, detect and manage fraud risk and identity verification effectively.
  • Account takeover prevention: Experian uses sophisticated analytics and enhanced decision-making capabilities to help businesses drive successful transactions by monitoring identity and flagging unusual activities.
  • Identifying card not present fraud: Experian offers tools specifically designed to detect and prevent card not present fraud, ensuring secure online transactions.

Take your fraud prevention strategies to the next level with Experian’s comprehensive solutions. Explore more about how Experian can help.

Learn More

Sources

1 https://www.security.org/digital-safety/credit-card-fraud-report/

2 https://www.emarketer.com/chart/258923/us-total-card-not-present-cnp-fraud-loss-2019-2024-billions-change-of-total-card-payment-fraud-loss

3 https://pages.sift.com/rs/526-PCC-974/images/Sift-2023-Q3-Index-Report_ATO.pdf

4 https://www.aarp.org/money/scams-fraud/info-2024/identity-fraud-report.html

5 https://www.fbi.gov/how-we-can-help-you/scams-and-safety/common-scams-and-crimes/skimming

This article includes content created by an AI language model and is intended to provide general information.

Related Posts

The Email Address as Your Most Powerful Identity Signal
Apply FSD Tag

The Email Address as Your Most Powerful Identity Signal

The why behind Experian's acquisition of AtData What happens when a comprehensive email intelligence database joins a global leader in data, analytics and fraud prevention? The acquisition of AtData adds 25+ years of building a complete view of email as an identity signal. Financial institutions can recognize, engage and protect customers unlocking a new standard for the way their teams work and the customer experience. That's what Experian's acquisition of AtData delivers. How we got here Not all email addresses tell the same story. Some are newly created. Some exhibit bot-like patterns. Some are inconsistent with every other signal you have about that person. Imagine a real customer. You have a job. You shop online. You have a primary email from your employer, a personal Gmail you've used for 15 years, and an old Yahoo address you still use for shopping because you've been using it since college. You're an engaged customer who interacts with brands, makes purchases and pays bills on time. But each system sees a different version of you. When you apply for credit, the lender sees one email. When you shop, the retailer sees another. When you sign up for a service, you might use the third. For financial institutions: You slow down the approval process to manually verify identity or approve applicants without the full picture. For retailers: You can't tell which version of "customer" is the most engaged, so you either over-mail or under-serve. For fraud systems: Sees a new account created under one email and flags it as suspicious because it doesn't have the history. This was the original problem AtData was built to solve in 1999. Twenty-five years later, that problem didn’t go away, it became more complex. Email fragmentation and device sharing are more common, and identity theft is more sophisticated. Capabilities that now work together Experian has built sophisticated identity and fraud solutions backed by consumer data resources and decades of expertise in credit and risk. AtData brought the ability to assess whether an email address is trustworthy, reachable and consistent—at scale, in real time. Experian is now making email intelligence foundational, not optional. This matters for: Fraud prevention and risk management: Distinguishing a returning customer from a new threat. Knowing whether an email is newly created, exhibiting bot-like patterns or inconsistent with other identities is crucial. Compliance: Building audit trails that can explain identity decisions. Email data history and behavioral signals create the documentation needed to defend your decisions. Credit: Verifying identity in a world where traditional signals are shifting. Email signals provide a persistent, durable identifier that confirms who someone actually is. Marketing: Reaching the right person across email, mail and digital channels. Email intelligence reveals which addresses are actively engaged and reachable. Research shows email remains one of the highest-ROI marketing channels outperforming paid search and social advertising1. The problem every marketer faces: You end up burning budget on addresses that bounce, are unmonitored or are associated with users who never open mail. For credit marketing specifically, email enables faster, more targeted delivery of firm offers across channels, something that's increasingly important in a post-cookie world. "Email is a persistent identifier in a fragmented world. It's what connects a person's postal address, phones, devices, behaviors—the full picture of who they are. By embedding that into our infrastructure, we're not just adding another data point. We're fundamentally improving how businesses understand who their customers are."- Ashley Knight, Senior Vice President, Financial Services and Data Why now? AI is reshaping how decisions are made in every industry. Models are getting faster, more automated and more embedded in core workflows. But AI is only as effective as the data behind it. Fragmented data + fast models = faster, larger-scale misclassifications. In an era of synthetic identities, AI agents, deepfakes and AI-generated activity, the value of durable, persistent, real-world data signals has increased dramatically. Deloitte’s Center for Financial Services projects that generative AI could drive fraud losses in the U.S. up to $40 billion by 2027, a 32% growth rate since 2023. And email sits at the center of it with business email compromise already being one of the most common and costly fraud types. People change phones, move homes and swap devices, but they often hold onto their email for years. That's the signal that protects your business, and the one we've built into the core of how we help you make decisions with confidence. View the press release here

August 6, 2026 by Zohreen Ismail
Building Financial Opportunity Through Purpose-Driven Partnership
Apply FSD Tag

Building Financial Opportunity Through Purpose-Driven Partnership

Discover how the National Urban League and Experian partner to expand financial literacy and create economic opportunity.

August 6, 2026 by Scarlet Nickel
2026 U.S. Identity and Fraud Report 
Apply FSD Tag

2026 U.S. Identity and Fraud Report 

Explore key findings and insights from our newly released 2026 U.S. Identity and Fraud Report. Read more now!

August 5, 2026 by Laura Burrows

Subscribe to our Newsletter

Enter your name and email for the latest updates.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Subscribe to our Newsletter

Don't miss out on the latest industry trends and insights!
Subscribe