24 Sep 2015

A scam in which a criminal changes a victim’s billing address with a financial institution to prevent the victim from noticing an account breach. COB fraud is meant to prevent victims from receiving bank or credit card statements tied to an account that a thief has gained access to and is stealing money from or making fraudulent purchases with. Scammers can also commit a crime similar to COB fraud by filling out a change of address form with the post office so that all the victim’s mail is forwarded to the thief’s address.

COB means change of billing address.

Another way COB fraud facilitates criminal activity is that by first changing a victim’s billing address with the financial institution, the thief can then use the changed billing address as the shipping address for on-line purchases. This address change makes it easier to commit fraud by using someone else’s credit card to pay for goods and services that are delivered to the scammer. A mismatched billing and shipping address can raise red flags with the merchant; changing the billing address first so it will match the new shipping address may keep the fraudulent transaction under the radar.

Credit card companies and merchants have sophisticated ways of monitoring for COB fraud. For example, address change notification lets a merchant know if the cardholder’s billing address was changed in the last 45 days and that the merchant might want to take additional steps to verify the purchaser’s identity. And by using sophisticated algorithms to detect changes from the cardholder’s usual purchase activity, credit card issuers often notice fraudulent transactions on a cardholder’s account before the cardholder is even aware of them. Also, financial institutions will usually email consumers who use their on-line services to let them know their billing address has been changed.

Consumers may not be able to prevent COB fraud, but they can keep an eye out for it by regularly reviewing their bank and credit card account statements and credit reports. COB fraud is unlikely to be effective if the victim regularly reviews his or her accounts on-line, where he can easily notice fraudulent charges.

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