Understanding Non-Cardholder Fraud

Non-cardholder fraud involves the use of the purchase card or cardholder data by an unauthorized person.  Non-cardholder fraud is investigated by special units within the banks.  Any information acquired that relates to non-cardholder fraud should be reported.  The risk of non-cardholder fraud is higher in certain situations including:

• Card never received – A new or replacement card has been mailed to the cardholder but was not received.  This may be due to a third party interception.  In this case, the account should be cancelled and new card issued. 
• Lost or Stolen Card – If the cardholder reports the card as lost or stolen, the account will be cancelled and new one issued.  Reporting the card as lost or stolen does not relieve the Government for payment for any transactions that were made by the cardholder prior to losing it.  If transactions not made by the cardholder appear on the statement, the cardholder has 60 days to file a dispute.  If it is not done within 60 days, they may forfeit their rights to dispute.   
• Altered or counterfeit cards – This occurs when third parties obtain account information and used that information to make purchases with an altered or counterfeit card.  If the banks recognize a fraudulent pattern of use at the time of authorization, the bank will validate the use of the card with the cardholder and/or suspend the card.  If transactions not made by the cardholder appear on the statement, the cardholder has 60 days to file a dispute.  If it is not done within 60 days, they may forfeit their rights to dispute.
• Account takeover/ Identity theft – In this case, the cardholder’s identity has been compromised and a third party has requested a new card by providing confidential information about the cardholder.  Any cardholder who believes that he or she may have been subject to identity theft should contact the bank’s customer-service department.  Once a determination is made that an account has been compromised, investigation is the responsibility of the bank. Unless a Government employee is determined to be involved in the fraud, the agency generally does not participate in the investigation.  The account will be closed, and a replacement account opened.