What Is Carding? A Complete Overview

There are many different methods of identity theft that target individuals. One of those types is called carding. Carding is a cybercrime that can lead to financial fraud. It is the illegal method by which criminals gain access to your credit or debit card data and use it without your consent. The practice of carding is also known as card fraud and can be conducted through various means, such as skimming.

Although the impacts of carding can be damaging, cardholders can still take measures to protect themselves from this type of identity theft. It's helpful to understand how this version of identity theft works, given that many consumers can easily become victims of it. Continue reading to learn more about how carding works, the different types of carding, plus cybersecurity tips and red flags if you believe you have been a victim of carding.

How does carding work?

Carding is a type of fraud by which your credit card information is stolen, such as skimming or point-of-sale system hacking, for financial gain. Criminals aim to use the card information that was obtained either from a data breach, through carding forums, or by purchasing that information from the dark web.

Once your details have been obtained, thieves test the validity of your card by attempting several small purchases across the internet. After the card has been validated, scammers will use your credit card information to purchase prepaid gift cards.

Carding differs from other ways to conduct identity theft or credit card fraud given that the thieves purchase gift cards and prepaid cards, which cannot be tracked. Once the transaction is complete, fraudsters are free to use the gift cards to buy items with their stolen funds. They can also sell gift cards on websites like GiftCash for money.

Types of carding attacks

With carding, cybercriminals go beyond just stealing your data and instead aim straight for your money. The process of this type of card fraud frequently involves individual credit or debit card accounts. These numbers and the information contained on the cards are then shared or sold on dark web marketplaces or other related carding forums.

Card information may have been compromised in a data breach, phishing attack, or otherwise related security issue. Below are some of the common methods these criminals employ to steal card data for their financial gain.

Phishing

Phishing is a type of carding fraud that involves a person attempting to get your personal information by pretending to be a business or organization you trust. Phishing can take place through email, text messages, or phone calls.

The most common method is often done by sending out phony emails that appear to come from legitimate companies. This is to trick you into clicking on links or divulging your personal information. For example, a scammer can send a phishing email that mimics a legitimate business you use and will request that you complete your purchase through their scam website.

Malware

Malware is malicious software designed to disrupt computer operations, gather sensitive information, or gain access to computer systems. Malware attacks are when hackers fool you into clicking a link that installs software onto your digital device. Most malware runs in the background and watches your activity without you knowing.

In relation to carding, this method of stealing your information involves the malware program searching your system for specific data on your devices. Malware can also embed a keyword stroke program, which will record every keystroke typed on the device. Hackers look for information like credit card and debit card numbers.

Hacking credit card processing systems

Another type of carding fraud is hacked credit card processing systems. Every time you make a purchase using your credit card, the information is stored with the merchant who sold you a product or service. This information is also stored at the bank where you have an account.

Carders steal this information from merchants or card issuers by hacking into their systems through methods such as malware and phishing. One example of how detrimental this type of breach can be is the Target data breach that occurred in 2013.

Credit card skimming and shimming

Credit card skimming refers to the practice of copying information from a card's magnetic stripe. Credit card shimming is identical to skimming in that thieves place a tiny device called a shim directly onto the card slot of a credit card machine or ATM.

The shim placement is key because it is designed to sit on top of the readers that accept chip-enabled cards. These devices are often also enabled with a microchip and flash storage to send the card information directly to the criminals that installed it.

In physical skimming or shimming, criminals will attach a shim directly to an ATM or credit terminal. In virtual skimming, thieves use software like keyloggers to obtain your PIN number and other sensitive details about your account, such as its balance. Once skimmers have the account information, it can then be used to clone the card. This card clone allows a criminal to make fraudulent purchases and withdrawals.

Carding red flags

Criminals use several different carding methods to steal your information. Below are several common red flags that shoppers and businesses should look out for if they believe they have been a victim of carding:

• Suspicious transactions in your credit or debit card account activity
• Emails from your bank asking you to verify a transaction or payment method
• Emails from a business about a purchase you did not make
• Someone contacting you claiming to be from your bank and asking for personal information
• Text messages from unknown numbers alerting you to suspicious activity and requesting you take action
• Emails from unknown businesses or individuals requesting you to provide specific details, such as your credit card information
• Unknown or suspicious-looking errors on websites when attempting to checkout
• Multiple issues with payment rejection with physical and online forms of payment
• Several failed payment authorizations from the same IP address for e-commerce websites
• Numerous chargebacks from the same customer or an increased number of chargebacks to your business

Tips to protect yourself from carding fraud

Carding is a method of identity theft that can be debilitating for many consumers. However, you can still take the following security measures to help reduce the chances of becoming a victim of carding:

• If you’re using a debit card, keep tabs on your spending limit and monitor how much money is left in your account.
• Avoid giving out your credit or debit card number via email or over the phone.
• Do not leave your card unattended in restaurants or other places where it might be stolen by someone else and used for illegal activities.
• Keep track of your receipts and ensure the purchase information is accurate.
• Save your bank’s official contact information and respond quickly to fraud alert contact requests sent directly from your bank.
• Utilize a password manager to securely save and store your passwords.
• Consider using credit cards with built-in fraud prevention features or investing in identity theft protection services.
• Employ the use of malware removal or antivirus programs and keep them up to date.
• Check your devices for any suspicious activity or high usage, and keep them regularly updated.
• Do not click on any links or attachments. Call the number listed on the back of your card instead and speak with someone directly about this issue.

How retailers protect you from carding fraud

In addition to consumers, many businesses have had to take measures to help protect themselves from carding fraud. Retailers have implemented numerous measures to protect themselves and their customers from this type of fraud. Retailers are doing this by using secure payment gateways, encrypted connections, and secure payment methods.

Many e-commerce sites are also taking digital measures that include requiring CAPTCHA confirmation, multifactor authentication requirements for payments, and checking billing addresses against a USPS address verification system (AVS). Retailers are also implementing card verification values (CVV) or a bank identification number (BIN) when processing credit card payments online to ensure there is consumer verification.

Furthermore, they often monitor all transactions and use fraud detection and prevention systems to protect themselves from this type of fraud. There is also legislation that requires retailers to report any suspicious or unusual transactions immediately so that police can investigate the matter further if necessary.

How to report carding fraud

If you suspect fraudulent activity on your card, the first thing to do is to file a report with the police. They will take your information and follow up with the relevant authorities to investigate the matter further. If you haven't been able to prevent a crime or if damage has already occurred, a police report can make recovering what was lost easier with your bank or identity theft protection insurance company.

Additionally, if you believe your card has been compromised or stolen, you will need to report it to your bank immediately. Notifying them quickly can help start the process to cancel the card and stop the fraudulent charges from continuing. You will want to ensure you keep a record of any fraudulent activity and the account information for both your bank and the authorities.

Carding FAQs

Bottom line

Carding is a type of credit card fraud that can cause consumers a lot of challenges. While carding is a serious issue to deal with, it can be mitigated with awareness and education. It is important for consumers like you to regularly review and report any credit or debit card suspicious activity. To stay informed on other forms of identity theft, we recommend reading our article on synthetic identity theft.

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Author Details

Amanda Scheldt

About the Author

Amanda is a technical content writer based in Illinois, USA. She has a Master of Science in Cybersecurity. After years of working in the tech and cybersec field, she pivoted her career to content marketing and writing within these industries.