Banks roll-over on smart card roll-out

AUSTRALIA'S banks are positioning themselves for the final run to introduce smart credit cards after years of baulking at the cost of phasing out magnetic-stripe technology in favour of microchips.

The manoeuvring is being influenced by the federal Government's $1.1 billion welfare Access Card project, but fresh questions have arisen over whether or not smartcards will provide consumers with significantly improved protection from credit card fraud.

Banks have claimed major victories in cutting credit card fraud thanks to the implementation of crime busting computer systems that use neural networking technology to detect illicit transactions.

Visa Australia head of business development Vipin Kalra said computer systems enabled banks to almost halve the cost of credit card fraud over the past five years.

Credit card fraud rates had been cut from up to 0.05 per cent of total Australian credit card sales five years ago to less than 0.03 per cent, Mr Kalra said.

The most common forms of fraud were skimming and counterfeiting, he said.

The Australian Payments Clearing Association agrees that the highest card fraud losses by value stem from skimming and counterfeiting, but estimates 2006 credit card fraud at 0.039 per cent of card transactions, or $87.4 million.

"We've seen a big drop in fraud in Australia over the past couple of years," Mr Kalra said.

"(The drop is because of) the banks' ability to put a lot of monitoring systems in place so they can track activities on the card. Those systems are now starting to show their benefits."

ANZ Bank widely advertised its Falcon neural network as part of a campaign to establish its security credentials.

Falcon identifies anomalous credit card transactions and is one of three platforms the bank uses to manage credit card fraud.

The others - Eagle and Hunter - are merchant-oriented systems to track fraudulent credit card applications.

ANZ general manager of consumer cards Nick Reade said these systems had helped the bank cut credit card fraud by 60 per cent in the past five years.

He cited examples where Falcon detected the use of a stolen credit card before the cardholder knew his wallet had been purloined because of changes in the buying patterns detected by the bank's systems.

Systems such as Falcon were an important part of ANZ's drive to establish itself as the most security conscious Australian bank, he said.

"Pretty well everything we do nowadays we communicate that we take fraud very seriously," Mr Reade said. "A lot of our own internal research on what's important to customers - drivers of satisfaction, drivers of usage of credit cards - increasingly (show) what's coming out as number one is security."

Mr Kalra said the fraud-fighting capabilities of computer systems such as Falcon meant banks had not been under pressure to implement smart credit cards.

Microchip-enabled credit and debit cards have long been touted as an important tool in the fight against payment fraud by Visa.

Many Australian banks have argued that the costs of implementing smartcards was greater than the cost of fraud.

"We have to get (to smartcards) but because fraud is under control within the banking industry there isn't a huge urgency to just turn over all the cards over night," Mr Kalra said.

Commonwealth Bank general manager of product and market development Brian White said the success of crime-fighting technologies meant consumers were unlikely to notice big reductions in creditcard fraud following the introduction of smartcards.

"(With smartcards) the consumer on the street has the confidence that he's consistent with the current standard. Does that mean today he's at risk as a consequence? Well the data shows he's not measurably," Mr White said.

Mr Kalra's and Mr White's comments were made at the launch of the Australian Smartcard Users' Forum (ASUF) last week.

ASUF members include the big four banks. It was founded to pressure the federal Government to use private-sector payment networks to process transactions associated with the $1.1 billion welfare Access Card.

ASUF chair and NAB regional general manager for specialised businesses Bruce Munro said the group would work to manage any consumer concerns if banks were seen to be lagging behind the federal Government on using smartcards to protect consumers from fraud.

"One of the reasons we put the forum together was to try and manage perceptions like that," Mr Munro said.

"Another risk, I suppose, is that the use of a chipped Access Card may have some negative connotations that we have to manage for our own roll-outs,"

ANZ's Mr Reade declined to comment on the activities of his competitors but said smartcards would play an important role in protecting consumers from fraud such as credit card counterfeiting.

ANZ has issued 1 million smartcards and has a goal of converting all 3 million ANZ cards smartcards within a year.

The CBA, NAB and Westpac are yet to announce smartcard roll-out timetables.

Credit card is ticket to fraud

The head of a Mumbai-based shipping company became the latest victim of online credit card fraud last month when miscreants used his account to buy thousands of rupees worth of airline tickets.

In a police complaint, Captain Ramesh Giridharilal Gulati, 67, chairman and managing director of Crystal Shipping Company Private Limited, said that “thieves” charged about Rs83,300 on his Standard Chartered card between November 8-11 when he was on an overseas trip to the Far East. The kicker is that the card was in his possession at the time of the “theft”!

Gulati, a Cuffe Parade resident, said, “I was shocked when I received my credit card statement for Rs83,296.40 on November 17. During my absence from India, someone had misused my card between November 8-10 to make 11 different transactions. The transactions were made to purchase airline tickets.” Gulati had gone on a business trip to Manila via Dubia on November 5. He returned to Mumbai on November 11.

“On November 10, I thought I had lost my card while checking out of the hotel in Manila,” he said. “I called my staff to call up Standard Chartered to report a lost card. However, during my transit period at Dubai airport on November 11, I found my card in my travel pouch. I informed the bank on November 13 that I had found the card. However, they had cancelled my card.”

Gulati received a statement for his old card on November 17. It listed 11 transactions - six on November 8, one on November 9 and four on November 10 - all for purchasing online tickets from various airlines.

The father of two then called the bank’s credit card division to report the “discrepancy”. The bank told him that they would investigate his complaint, and it would take a month’s time. On November 18, Gulati filed a complaint with the Azad Maidan police station. Prakash Khanvilkar, senior police inspector with the Azad Maidan police, said, “We have received a written complaint, but we cannot comment at this time. The case is under investigation.”

A spokesperson with Standard Chartered Bank on DN Road, also refused to comment, saying, “We cannot comment as it is under investigation.”

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.

Business Day

Credit card fraud in Northern Ireland

Credit card fraud in Ulster tops £2m

By Jonathan McCambridge, Crime Correspondent
jmccambridge@belfasttelegraph.co.uk

08 July 2005

CREDIT card fraud has cost consumers in Northern Ireland over £2m in just four years, it can be revealed.

However, the public has been warned that the full extent of the level of deception and identity frauds could be substantially higher because the majority of these crimes are never reported to police.

It is believed that the majority of the frauds involve instances of lost or stolen cards or 'skimming' crimes.

Security Minister Shaun Woodward revealed that the PSNI have dealt with 2,136 cases where criminal benefit had been obtained from credit card deceptions since 2002.

In response to a written parliamentary question from Strangford MP Iris Robinson, the Minister revealed that the total gain to criminals was £2,305,061.

He said: "I am assured that the PSNI Cheque and Credit Card Unit is working closely with all relevant agencies and is involved in a number of different initiatives in an effort to combat credit card fraud.

"These figures are based on incidents reported to the police.

"The true figure could be significantly higher as much of this type of crime is not reported directly to the police, but rather financial institutions such as banks."

Strangford MP Iris Robinson said: "It is alarming that already in 2005 almost half a million pounds has been lost through credit card deception in Northern Ireland, which is more than the full-year totals both for 2002 and 2003.

"The figures provided by the Minister of course represent only a fraction of the real total.

"Clearly there is a significant amount of this form of crime occurring in Northern Ireland. The public need to be watchful regarding protection of their personal details."

USA TODAY - Editorial on Fighting Online Fraud By VISA USA

I take issue with USA TODAY's article "Credit card fraud hits small online merchants hard" (Money, June 28).

Protecting cardholder information and preventing fraud are job one at Visa. Our company has invested billions of dollars in the industry's most advanced anti-fraud technologies, resulting in an all-time low fraud rate of 5 cents per $100 transacted.

Some readers might infer from the story that merchants alone bear the cost of fraud. They should know that in a majority of transactions — those where the card is present at the point of sale — liability rests with the bank issuing the card, as long as the merchant follows simple steps for card authentication.

For card-not-present sales, Visa has put in place multiple tools to help merchants avoid fraud-related costs.

For example, our Verified by Visa authentication service transfers fraud liability costs from the merchant onto the card-issuing bank. Our Card Verification Value 2 technology helps verify that online customers are in physical possession of the card. Utilizing the Address Verification Service allows online merchants to match the purchaser's billing address to the billing address of the actual cardholder on file with the issuing institution.

Fighting fraud is a role that financial institutions and merchants alike must play. I urge merchants to visit www.visa.com/merchants to find out more about our fraud prevention technologies.

Merchants should also contact their financial institution and/or processor to determine which fraud-fighting services are available for use on behalf of our shared customer: the U.S. consumer.

John Shaughnessy Jr., Senior vice president, Risk Management Visa USA, San Francisco