Avoiding Credit Card Fraud

November 24, 2006

Avoiding Credit and Charge Card Fraud

A thief goes through trash to find discarded receipts or carbons, and then uses your account numbers illegally.

A dishonest clerk makes an extra imprint from your credit or charge card and uses it to make personal charges.

You respond to a mailing asking you to call a long distance number for a free trip or bargain-priced travel package. You're told you must join a travel club first and you're asked for your account number so you can be billed. The catch! Charges you didn't make are added to your bill, and you never get your trip.

Credit and charge card fraud costs cardholders and issuers hundreds of millions of dollars each year. While theft is the most obvious form of fraud, it can occur in other ways. For example, someone may use your card number without your knowledge.

It's not always possible to prevent credit or charge card fraud from happening. But there are a few steps you can take to make it more difficult for a crook to capture your card or card numbers and minimize the possibility.

Guarding Against Fraud
Here are some tips to help protect yourself from credit and charge card fraud.

Do:

• Sign your cards as soon as they arrive.
• Carry your cards separately from your wallet, in a zippered compartment, a business card holder, or another small pouch.
• Keep a record of your account numbers, their expiration dates, and the phone number and address of each company in a secure place.
• Keep an eye on your card during the transaction, and get it back as quickly as possible.
• Void incorrect receipts.
• Destroy carbons.
• Save receipts to compare with billing statements.
• Open bills promptly and reconcile accounts monthly, just as you would your checking account.
• Report any questionable charges promptly and in writing to the card issuer.
• Notify card companies in advance of a change in address.

Don't:

• Lend your card(s) to anyone.
• Leave cards or receipts lying around.
• Sign a blank receipt. When you sign a receipt, draw a line through any blank spaces above the total.
• Write your account number on a postcard or the outside of an envelope.
• Give out your account number over the phone unless you're making the call to a company you know is reputable. If you have questions about a company, check it out with your local consumer protection office or Better Business Bureau.

Reporting Losses and Fraud
If you lose your credit or charge cards or if you realize they've been lost or stolen, immediately call the issuer(s). Many companies have toll-free numbers and 24-hour service to deal with such emergencies. By law, once you report the loss or theft, you have no further responsibility for unauthorized charges. In any event, your maximum liability under federal law is $50 per card.

If you suspect fraud, you may be asked to sign a statement under oath that you did not make the purchase(s) in question.

For More Information

The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit www.ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Credit Card Fraud

Credit card fraud falls to record low

Thursday July 07, 2005 11:55 - (SA)

By Stephen Gunnion

Credit and debit card fraud is at a record low, despite growing volumes of transactions globally. A recent breach of security at a third-party card-processing plant in the US, which compromised up to 40-million card numbers globally, is unlikely to alter the statistics, says credit card company Visa.

Visa says industry efforts to combat fraud are paying off as card issuers tighten payment-processing security.

Jim Devlin of Visa's fraud department for central Europe, eastern Europe, the Middle East and Africa region (Cemea) says that last year only 6c of every $100 spent with credit cards was lost to fraud.

Counterfeit cards remain the highest contributors to fraud, at 47%, followed by lost and stolen cards at 29%, Devlin says.

Simon Dean of the same Visa fraud department says MasterCard, Visa and American Express, the three largest credit card companies, have aligned standards to which banks have to adhere to protect account holder information.

Despite this, the "phishing" of account holder information by the US card processor highlighted a flaw in the system.

Phishing is when customers' personal information, including account details and PIN number, is collected to conduct fraudulent transactions on internet and telephonic transactions.

About 22-million of all the account numbers at risk globally were of Visa cards, while about 14-million were of MasterCards.

Devlin says the effect of the US breach on customers was minimal, with about 20000 accounts compromised but not necessarily affected by fraud.

Last month, Visa said only 6000 of its South African account numbers had been compromised, and a number of those had expired.

MasterCard said 6000-7000 of the total number of MasterCards that had been exposed to risk were for South African accounts.

At the time only one South African account had been affected.

Standard Bank, SA's biggest credit card issuer, had identified about 1500 credit card customers who could potentially be affected, and all accounts were replaced with new ones as a security precaution.

"It was a highly unfortunate incident and one that hasn't done the industry any benefit," Dean says. He says while the financial loss from the card compromise in the US was small, the damage to the reputation of credit card companies was large.

"The last thing Visa would want is for the internet and e-commerce to be deemed insecure. The protection of data is most important," he says.

Dean says the US card compromise was still the subject of an FBI investigation in the US and it was still unclear how it happened.

Customer data that should not have been stored had been stored by the processor, he said.

Under an industry-wide security programme, banks, merchants and card processors have to adhere to certain security standards.

Dean says the move to chip-based cards will reduce fraud even further as it will take the responsibility away from merchants to ensure cards are authentic. Chip cards had successfully addressed this in France, where they were introduced in the 1990s.

Growth in card fraud between 1993 and 2003 had prompted the UK to move quickly to chip cards, Dean says.

But Devlin says it would be years before chip-based cards were rolled out world wide. Merchants would need special chip readers before the system was implemented.

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