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Credit Card Fraud Tops Consumers Concerns

 

A recent study conducted by the Unisys Corporation shows that identity theft as it pertains to credit card fraud is Americans’ number one concern.

When people ask me, “How do I protect myself from credit card fraud?” I tell them, “Cancel the card, or never use it.” Because that’s the only way.

Personal security (as it pertains to violence) and national security have always been a concern. However, this new study shows that people are more concerned with fraud, and the risk of having their savings depleted by scammers. Not so hard to believe, what with the number of data breaches, and the Madoffs of the world fleecing their unsuspecting investors.

75% of Americans feel that the recession has increased their chances of being victimized by criminal hackers and thieves. Most are also concerned their “private” information on a corporate or bank network may be compromised.

FBI’s Internet Crime Complaint Center’s 2008 Annual Report determined that online fraud increased by 33.1% last year. Dollar losses resulting from online fraud increased to $265 million.

Overall, these concerns are valid, due to flaws in the system of issuing credit that facilitate new account fraud. Furthermore, account takeover requires nothing more than access to credit card numbers, which are available in hacked databases or susceptible every time you hand your card over to a gas station attendant.

Viruses in spam or phishing emails continue to plague consumers and as scammers get more sophisticated, the chances of getting hooked increase.

Banks and business will continue to feel the pressure as criminals target their clients’ data.

Credit card skimming at ATMs and gas pumps makes it impossible to protect yourself when you could essentially be handing your digits over to a criminal.

Skimming is one of the financial industry’s fastest-growing crimes, according to the U.S. Secret Service. The worldwide ATM Industry Association reports over $1 billion in annual global losses from credit card fraud and electronic crime associated with ATMs.

Marite Ferrero, a blogger with Finextra, adds, “In Europe, the points of compromise are everywhere: ATM, gas pumps, parking, DVD rentals, movie tickets, food kiosks, tolls, buying metro tickets, and the list goes on… Because of chip and pin implementation, the proliferation of stand-alone terminals that accept chip and pin has provided a profitable playground for fraudsters.”

While the card holder is generally only responsible for the first $50.00 in losses, which is often waived by a “zero liability policy,” card holders who don’t pay attention to their statements often let these charges pass and eat them.

There are many technologies available to secure credit cards, such as “smart cards” and “chip and pin.” However, due to the nature of a credit card transaction, once the data leaves the card, it’s up for grabs. Whatever card security their may have been is now gone.

Check your credit and banking statements carefully. Scrutinize every charge and refute any unauthorized charges within 30-60 days. Call your bank or credit card company immediately if you see any fraudulent activity.

Invest in identity theft protection. Credit freezes or fraud alerts help prevent new account fraud. Protect your PC with Internet security software.

Robert Siciliano, identity theft speaker, discusses credit card fraud.

 

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Comments: (1)

A Finextra member
A Finextra member 08 April, 2009, 09:01Be the first to give this comment the thumbs up 0 likes

Comparing the U.S. market to Europe, it is clear that LESS PIN means LESS FRAUD. People here in europe ask me why U.S. cards are without pin codes and only with magnetic stripes. In the same line of questioning and almost always without a pause, people asking then exclaim that they are sure that card fraud must be rampant in the U.S. and that the U.S. banks are losing a lot of money because of fraud.

I then explain that credit cards issued in the U.S. are usually issued without pin-codes. I also then say "Why skim a card that does not have a pin-code"?

So if an american asks "How do I protect myself from credit card fraud?”, I would tell them:

1. Do not ask for a pin-code for your credit card. Do not use your card for pin-based transactions. Pay your gas with a credit card and signature. 

2. Ask your bank for an ATM-only card to withdraw money from your account. Use this ATM-only card with ATM machines found inside your bank's buildings (besides there are no ATM fees if you use your bank's ATM machines).

3. Before you travel, contact your bank and make sure your ATM-only card can be used outside of the U.S. to withdraw money. Use your ATM-only card in machines located inside the airport. If possible, limit your ATM card usage to ATM machines located inside a well-established bank's premises. Do use your credit cards and sign for them. U.S. cards without pin-codes are not good targets for skimming, don't worry.

4. Now for card-not-present fraud (internet payments), my best recommendation is only use a card issued by a bank that allows you to check your card usage as often as you would like (in case this card is a debit card). Otherwise, always use a credit card for card-not-present transactions and check your card statement when it arrives. You can always dispute and charge back any fraudulent usage of your card credit card number.   

The one and only time I noticed a fraudulent transaction in my card statement while I lived in the U.S. came from a gasoline attendant who did a double impression of my card. It was quite foolish of the gasoline attendant to do this as this was easily caught.

U.S. card fraud rate is less than half that of U.K.'s card fraud rate.

Lastly, the Fair Credit Billing Act limits the (credit) cardholder’s liability to $50.00 while the Electronic Funds Transfer Act applies to debit cards. From http://www.federalreserve.gov/pubs/consumerhdbk/electronic.htm) :

On lost or stolen credit cards, your loss is limited to $50 per card (see Lost or Stolen Credit Cards). On an EFT card, your liability for an unauthorized withdrawal can vary:

  • Your loss is limited to $50 if you notify the financial institution within two business days after learning of loss or theft of your card or code.
  • But you could lose as much as $500 if you do not tell the card issuer within two business days after learning of loss or theft.
  • If you do not report an unauthorized transfer that appears on your statement within 60 days after the statement is mailed to you, you risk unlimited loss on transfers made after the 60-day period. That means you could lose all the money in your account plus your maximum overdraft line of credit, if any.