What does the term 'Bust-Out Card Fraud' describe?

The term 'Bust-Out Card Fraud' refers to a fraudulent scheme involving collusive merchants and cardholders. In this context, the fraud occurs when individuals, often acting as cardholders, intentionally overuse their credit cards without the intent to pay back the charges, typically in collaboration with complicit merchants. This collusion allows the cardholders to maximize their illicit gains while the merchants benefit from the fraudulent transactions, often by taking a cut of the profits or facilitating the transactions to create a facade of legitimacy.

This understanding is crucial as it highlights the complexities of fraud schemes that go beyond mere theft and involve organized manipulation of the credit system through cooperation between consumers and businesses. It emphasizes the need for vigilance and effective measures to detect and prevent such schemes within the payments ecosystem. In contrast, the other options fail to capture the essence of 'Bust-Out Card Fraud' as they describe scenarios that either don’t involve collusion with merchants or that limit the nature and scope of the fraud.