Game fraudulently purchased

1) Steal credit card.

2) Buy games with credit card.

3) ???

Congrats, you fraudulently purchased games. Or you could do a chargeback, or whatever. Basically not paying for the games or paying for them illegally.

usually from a fake or stolen credit card

Perhaps the person you receive it from scammed it or used a stolen credit card to purchase it. There are numerous reasons or ways it could be fraudulent.

phishing paypal information and going on a steam store shopping spree is apparently a thing.

Basically, if you steal someone's credit card, they'll eventually report it stolen, but it'll work until then.

So if you buy a game with a credit card, and that card is then reported stolen and the charge fraudulent, the credit company will contact Valve, valve will track down what purchases were made with the stolen card, and undo them.

Credit card payment 'bounces' or doesn't complete properly is another one along with the others mentioned in this post.