What Is Carding? How It Works, Prevention Methods, and Examples – Carding is a form of fraud where stolen credit or debit card information is used to charge prepaid cards, purchase gift cards, or assist other schemes. Stolen cards can be used to purchase store-branded gift cards, which can then be sold or used to purchase other goods that can be sold for cash. Stolen card information can also be sold to others. Credit and debit card thieves who are involved in this type of fraud are called “carders
How Carding Works
Carding typically starts with a hacker gaining access to a store’s or website’s credit card processing system, with the hacker obtaining a list of credit or debit cards that were recently used to make purchases. Hackers might exploit weaknesses in the security software and technology intended to protect credit card accounts. They might also procure credit card information by using scanners to copy the coding from the magnetic strips.
Credit card information might also be compromised by accessing the account holder’s other personal information, such as bank accounts the hacker has already gained entry to, targeting the information at its source. The hacker then sells the list of credit or debit card numbers to a third party—a carder—who uses the stolen information to purchase a gift card.2
Carding forums are websites that teach fraudsters about this illicit trade. Fraudsters use these sites to buy and sell their illegally-gained credit and debit card information.3 They also use them for money laundering.4
PINs and chips have made it more difficult to use stolen cards in point of sale transactions, but card-not-present sales remain the mainstay of card thieves and are much discussed on carding forums.
Most credit card companies offer cardholders protection from fraudulent charges if a credit or debit card is reported stolen, but by the time the cards are canceled, the carder has often already made a purchase. The gift cards are used to buy high-value goods, such as cell phones, televisions, and computers, as these goods do not require registration and can be resold later. If the carder purchases a gift card from an electronics retailer, such as Amazon, they may use a third party to receive the goods and then ship them to other locations. This limits the carder’s risk of drawing attention to themselves. The carder may also sell the goods on websites offering a degree of anonymity.