Module 2: Understanding and Preventing Virtual Card Fraud
Key Fraud Vectors with Virtual Cards
Fraudsters exploit virtual cards via:
Stolen Credentials
Phishing or malware can compromise user credentials.
Once access is gained, attackers generate or use existing cards.
Compromised Merchant Integrations
If a merchant is breached, saved virtual card details may be exposed.
Vulnerabilities in integrations (e.g., unsecured APIs) can be entry points.
Social Engineering of Customers or Support Agents
Impersonation or manipulation to gain access to card creation flows or login recovery.
Account Takeover (ATO)
Email and password reuse enables login via credential stuffing or brute-force attacks.
Abuse of Programmatic APIs
If an API key leaks or isn't rate-limited, attackers can create cards or drain balances.
Real-World Case Examples
Case 1: B2B Virtual Card Abuse in Expense Systems A vendor infiltrated a client's expense reimbursement system and issued multiple virtual cards for fake invoice payments. Lack of per-transaction approval controls enabled the fraud.
Case 2: OTP Interception for Card Activation Attackers used SIM swap to intercept OTPs during card setup, enabling unauthorized activation and spend.
Case 3: API Key Compromise An engineering team mistakenly exposed sandbox and production API keys in frontend code. Fraudsters created virtual cards and ran test transactions on stolen services.
Built-in Protections of Virtual Cards
Virtual cards inherently reduce some fraud risks:
Unique card number per transaction or merchant Prevents re-use if compromised.
Spending and merchant controls Limit where and how a card can be used.
Auto-expiry and low-value limits Prevent long-term fraud exposure.
No physical card theft risk.
Virtual cards provide spend control, transparency, and automation to identify and prevent suspicious or abnormal transactions in real-time.”
Best Practices for Fraud Prevention
Platform Controls
Enforce 2FA and biometric authentication
Lock virtual cards after suspicious activity
Enforce strict API key rotation and rate limits
Integrate fraud detection systems for behavioral anomalies
Customer Guidelines
Never share card credentials or OTPs
Use unique login credentials across platforms
Enable alerts for every transaction
Report suspicious activity immediately
Team SOPs
Set merchant category codes (MCC) restrictions
Require secondary approval for high-value card creation
Use velocity checks (e.g., number of cards per user per day)
What to Watch For (Red Flags)
Card created and used immediately
Multiple cards generated in short succession
Spending pattern deviates from norm
Frequent declines or failed authorization attempts
Logins from unusual geolocations or devices
Quick Assessment: Module 2
Choose the most secure virtual card practice:
A. Allow cards to be reused across vendors
B. Send OTPs over email only
C. Enable biometric auth for card creation
D. Allow card creation without limits
Correct Answer: C
