Small Charges, Big Risks: Unmasking Card Testing Fraud in Crowdfunding and Food Delivery

When it comes to credit card fraud, it’s the big transactions and the massive payments that draw eyes and send panicked owners straight to the phones to cancel their cards. But far more insidious are the smaller transactions carried out before this, to see if a stolen credit card will be profitable if passed along.

This card testing fraud is what we’re going to be exploring in this article, and how scammers use crowdfunding sites and food delivery apps to see whether a card can be exploited further.

What Is Card Testing Fraud?

To better understand “What is card testing fraud?”, let’s take a closer look at what it entails. There are a lot of compromised cards out there, the sad result of data breaches, direct theft, or card cloning. Lists of these cards are sold on the dark web, and scammers who buy them will test if a card is valid to exploit it themselves or sell the details on to someone who will.

How do they test? Much as you might dip your toe into the water before taking a plunge, the scammers will try for small transactions on a card, pretending to donate to a good cause on a crowdfunding site or order a drink (or something small) from a food delivery app. Sometimes the card is attached to an account by an automated process (through bots), and other times, details are entered manually.

These small transactions often go overlooked by the owners of these cards or unreported by a bank’s automated messages, as they fall under a certain amount. A few dollars are no cause for alarm, while a few thousand will have the bells ringing.

Why Crowdfunding and Food Delivery?

Just to be clear, it’s not just crowdfunding and food delivery apps suffering from credit card testing fraud. All businesses can be hit, but those that make use of an app, don’t deal in a lot of money per transaction, or accept donations online are particularly susceptible.

Often, new and small businesses, inexperienced in the ways of fraud, are prime targets for these testers.

Who Does This Scam Hurt?

This type of fraud is one that hits both consumers and businesses. You might think immediately of the poor soul whose credit card is being used for these small transactions, and you’re right. These will become big hits later when the card is used for bigger payments. Combined with this is the identity theft that might accompany it.

Just as impacted, though, are businesses. The scam impacts these merchants in many ways. These include:

Revenue loss through transactions – In addition to losing income through the cancellation and reversal of a fraudulent transaction, small businesses are often left having to pay the merchant fees for their trouble, too.
Blocklisting – Too much fraud on one account can cause banks to blocklist a company, harming their ability to use cards in transactions and harming the business as a whole. The real owner of the card might also blame the business itself, causing further reputational damage.
Operations – If too many transactions are happening at once, it can put an operational strain on a business and can get in the way of legitimate transactions.
Escalation – Failure for a business to act on these transactions may lead to even bigger purchases, larger fraud, and more losses for the business.

Protecting Yourself

Whether you’re a concerned cardholder or business, keeping yourself safe from this fraud requires a few measures:

Ensure two-factor authentication is enabled for your card and your app.
If running crowdfunding, set a minimum donation amount.
If running an app, insist that users create accounts.
Add a captcha code to evade bot testing.
Regularly check your account and monitor all transactions (no matter how small) for suspicious activity.
Block activity from suspicious accounts or IP addresses and report them to your bank immediately.

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