How to protect yourself from credit card fraud

Credit-card fraud is an increasingly sophisticated crime that costs Australian businesses an estimated $100 million dollars a year. Card numbers are copied, PINs stolen and personal information traded across continents. How safe is your plastic? By Rachel Davis.

Imagine opening your monthly credit-card statement and finding that $12,000 worth of electronic goods have been bought on your card in India, but not by you. This is what happened to mother of two, Kristin Tasman, and she remembers the feeling of panic well.

“I picked my son up from school and was having a really good day, but after I looked at my credit-card statement, I just burst into tears. I managed to call my husband to tell him what happened, but I was really shaken.” Within minutes, Kristin received a call from her bank, which verified that neither she nor her husband had authorised the payment.

“I asked the person from the bank what would happen, and she said it would be investigated immediately and that they would get back to us within 24 hours. I couldn’t think of any time that my card had been handled by someone out of the ordinary – I’m a careful person and hadn’t even paid a bill online.”

Kristin’s bank asked her to circle the suspect transactions on her statement and fax it over. Someone called her the next morning to confirm that fraud had been identified and that she and her husband would suffer no penalty over the incident. Kristin remembers, “I was so relieved; I couldn’t believe how quickly the bank had managed to sort it out. For a while there, I thought we’d be held responsible for the money, but it never seemed to be an issue for the bank.”

So you can put your mind at rest – an Australian bank will not hold you liable for fraudulent use of your card if you have used it responsibly, no matter which country your card has been used in.

The fraud squad

Fraud detection is becoming increasingly efficient. Only a few years ago, most fraudulent transactions on a credit card were detected by the card holder. The banks themselves now have dedicated teams of people employed to monitor credit cards and watch for criminal activity – all day, every day. Derren Jones, manager for transaction and identity fraud at National Australia Bank (NAB) confirms this. “When a possibly fraudulent transaction is identified by our bank, the first thing we do is put a block on the card. We instantly refund the money and order a new card for the customer. Then we start the investigation.”

Big Brother’s little brother

Four of Australia’s top-five banks use Falcon monitoring software – you’ve probably seen the ads. It’s a computer program that tracks the spending patterns of each customer and creates an individual profile. It scores every card purchase you make out of 1,000. Let’s say you normally buy groceries from the same supermarket every week and gifts for friends and families locally. Any normal spending would be scored no higher than 500. Then your card is used in Hong Kong to buy $2,000 worth of jewellery. Falcon would instantly send a message to your bank with a score nearer 1,000, alerting them to possible fraud.

Depending on what time of day it is, your bank would either contact you or put a block on your card until they have been able to reach you. Ian McKindley, country risk manager for Visa International Australia/New Zealand, says Visa has a “zero liability policy for card holders” and offers this important advice: “Make sure your bank always has your current contact details.” It seems obvious, but how many of us change our mobile number and remember to notify our bank? If the bank can’t reach you, you won’t be able to use your card. Consider notifying them when you go overseas as an extra precaution.

Banks and card companies are also investigating ‘Chip and PIN’ cards, which have been wildly successful in the UK, reducing card fraud by an estimated 40 per cent. A Chip and PIN card has a microchip installed, containing card and customer information, and is used in conjunction with a PIN number – no signature required. Why aren’t we using these cards here in Australia? Because, Ian says, “We are experiencing a ten-year low in credit-card fraud”.

He goes on to say that in Australia, this type of fraud accounts for only 3.5 cents in every 100 dollars spent on cards, compared to up to 15 cents in every dollar in some countries. We can look forward to using Chip and PIN cards no later than 2010.

New-age shoppers

Credit cards have been used for decades, but we’ve only recently been shopping over the phone or internet. Credit cards were designed for face-to-face shopping, where the shopkeeper could look at the card, check your signature and process the transaction while you’re in the shop. But times have changed.

Three million people in Australia are regular users of services found on the internet, and Ian estimates online shopping in Australia is doubling every year. If you don’t shop over the internet because you’re worried about putting your card and personal details into cyberspace, your bank is catching up.

Visa and MasterCard have come up with an innovative way to shop online – Verified by Visa and MasterCard SecureCode. These are secure online environments – using confidential passwords and ‘personal assurance messages’ – designed to redress the balance for merchants, who bear the brunt of credit-card fraud costs. How do they work? As a MasterCard Visa cardholder, you register with the bank and receive a list of approved, participating businesses. You can feel secure shopping online, while the business provider has the security of knowing who’s buying from them. It’s internet shopping minus the fear factor.

Also, you may recently have been asked to turn your card over and repeat the three-digit code on the back. This is called the CVV (Card Validation Value) and is another way banks and merchants ensure phone and online customers are in possession of the credit card used.

Fraud-speak

Fraud has its own jargon, and it helps if you understand it. ‘Phishing’ is a common technique used by criminals who try to dupe you into putting personal, card and bank information into an insecure email. These messages may include your bank’s own logo and look incredibly realistic. Carole Donaghy, director for Virgin Credit Cards, explains: “Banks and card companies do not send you emails asking you to verify your [personal and financial] details. If you receive one, consider it phishing by a potential fraudster.” Carole advises customers never to use email for personal and financial information, and to only use a secured site. ”Look for the small padlock on any site you visit,” she advises. “If it isn’t there, do not enter any personal or financial information.”

‘Skimming’, another high-tech crime, is much more difficult to protect yourself against. Kristin, whose card was replaced and PINs changed after her first experience with fraud, was again a victim just a few months later.

“I was in the back garden one Sunday afternoon, when I got a phone call from my bank. I was asked if I was in Adelaide. I wasn’t. I was then told that my card, my actual card, had been used to buy over $3,000 worth of clothes from a shop in Adelaide minutes before.” Kristin was worried that, after this second instance, she’d be black-listed by her bank.
“I racked my brains and could only think of one instance when I put some petrol in my car and the EFTPOS machine was broken and they took a carbon copy of my card. What I couldn’t believe was there was again no question of us finding the money and that we could have a new card.”

Even if you are the victim of fraud a number of times, your bank won’t refuse you a credit card. The institution’s fraud division will keep a close eye on your account and may call you regularly to check that it is you using the card, but it will not refuse your business. NAB even tailors credit cards for customers who live in high-risk areas or have experienced multiple fraud on their cards.

The second time Kristin’s card was targeted, she was almost certainly the victim of skimming, which Ian believes is now responsible for 40 to 50 per cent of all credit-card fraud in Australia.

Skimming often occurs in businesses where there are a lot of transitory staff, such as restaurants. The skimming device can be as small as a mobile phone or pager, and can be concealed in a pocket or hidden near the point of sale.

Once the card is swiped by the skimming device, the card number, name and expiry date are copied and stored, then used to make counterfeit cards, such as Kristin’s fake card in Adelaide.
The only way to protect your credit card against skimming is to keep your eyes on it at all times. Don’t put it into those leather folders at restaurants – pay on your way out, and never turn your back at the petrol station. Take your card to the till and watch where it goes.

Guard your card

Your bank and credit-card company are keeping up with the fraudsters to ensure you can shop how and when you want to, without being afraid. But the financial institutions can’t protect you against the inconvenience of having to change your cards and PINs and cancel all your direct debits. So avoid fraud by treating your card like the extremely precious possession it is – not like any old piece of plastic in your wallet. Deahne Faulk, spokesperson for Virgin Money offers these tips to help safeguard your card and financial details: 

• If you’re expecting an ATM or credit card in the mail, contact your bank if it’s taken more than a few days. 
• Sign the back of your card immediately after you receive it. 
• Treat your card as if it were cash, and do not leave it unattended anywhere. 
•  When using your credit card, always read the receipt and verify the transaction before signing. 
•  Ensure that your own card is handed back to you after use, not a different one. 
•  Do not allow any vendor to take your card out of your sight.
• Tear up credit-card and bank statements before throwing them out.

Protect your plastic

• If you need to write down the PINs and passwords for your bank cards, disguise them and keep them in a different place from your cards. Choose somewhere they’re unlikely to be stolen or lost at the same time as your card.
• Choose PINs and passwords that are difficult to guess. Avoid giveaways, such as your date of birth, part of your name or other things thieves could work out.
• Alert your bank or institution as soon as you realise that your card has been stolen or lost, or if you think there may have been unauthorised use of it.

© Reproduced with permission of the Australian Securities and Investments Commission”.

 

Words: Rachel Davis. Photography: Scott Hawkins. Hair & make-up: Jay Jay Rauwenhoff.