Card-Not-Present fraud is based on making online purchases with stolen credit card information. This fraud involves another type of crime, most often phishing, since, the scammers need real card information, and phishing is a technique which tricks the user into submitting his card information to a look-a-like credible websites.
This fraud is only possible online and as the name implies the scammer does not have the physical card on him, he only has the main information, which he can use to order goods online.
Another fraud which is considered a sub-fraud of the card-not-present one is called online shoplifting. The methodology is the same, but now the scammer has hold of the card, on which will ask for a refund. He purchases goods from online shops which always required shipping, after delivery though, he asks for a refund from the card issuer and states that he did not receive any goods. This type of fraud is very close to the Non-Delivery fraud, but instead of the scammer not sending any goods to the victim, the scammer lies that he has not received any goods. Sadly, after the merchant has been scammed, he can’t do anything to receive the goods back, and must take the loss.
The type of scam is easily preventable, with the rise of technology and whole ecosystems which revolve around phones, you can make your payments with two factor authentication, this ensures that once somebody gets hold of your information, or even your physical card, you can confirm the payment with your phone. This another layer of protection makes the scam pretty hard to pull off, and the scammer must know when the victim is not on his phone and whether or not has two factor authentication which will instantly signal that a payment was made. Another useful feature is notifications, and full logs about the payment provided via online banking.
Having notification for each payment might be annoying at first, but might save you big losses from such frauds.