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By Russell Cavanagh
Staff Writer, 8 September 2008
Some credit cards come with free services for extra security against fraud whilst others offer similar cover for a minimal fee. However, all credit cards now provide basic security using chip and pin technology. It pays to compare credit cards before deciding on the plastic you choose.
What types of credit card fraud are there? What can you do to minimise the risk of fraud? What extra protection is on offer?
Types of credit card fraud
APACS, the UK trade association for institutions that deliver payment services to borrowers, estimates that UK credit card fraud cost £535 million in 2007. This amount has increased year on year.
Credit card fraudsters operate in a variety of ways. They may:
- Physically steal a card or use one they have found
- Clone cards - known as "skimming" - when seemingly processing a legitimate transaction (e.g., in a restaurant)
- Steal details from credit card receipts and make purchases - the largest single type of fraud in the UK - over the internet, by telephone, fax and mail order
- Intercept cards sent by lenders before they reach customers’ addresses
- Steal your identity by opening new accounts you know nothing about using utility bills, bank statements and other proof of ID they either found or stolen
- Take over an existing account and pretend to the lender that they are you before arranging payments from your balance - or even change addresses to have new cards and cheque books delivered elsewhere
- Watch you input your PIN number at an ATM before stealing the card and withdrawing cash
- Use a device fitted over an ATM slot that withholds your card and asks you to re-enter your PIN number (while the fraudsters watch)
21 million people now bank online and two thirds of the population have internet access in the UK. With such a rise in the use of online communication, it should be no surprise that credit card fraud is increasing.
Steps you can take personally to minimise credit card fraud
There are simple measures you can develop in order to make yourself less vulnerable to credit card fraud.
Purses and wallets are regular targets for thieves and often contain old account statements or credit card slips. Store statements and slips elsewhere in your clothing to file away later before shredding them along with other documents and receipts containing personal or financial information you no longer need.
Shred credit card applications you receive in the post before binning them. This is also a good idea for other unsolicited invitations to financial products such as insurances, personal loans, savings accounts, etc.
If you buy from websites, check they offer secure payment facilities so personal data you send is safely encrypted into code nobody else can read. There should be a yellow padlock symbol in the browser or the site’s web address will start with “https”. You can also check the security certificate matches the website viewed.
Especially if using a Windows machine, make sure you have up-to-date software to deal with viruses and other attacks from third parties. "Phishing" has become very common and this involves fraudsters planting software on your PC that searches what keys you have pressed as they try to identify account numbers, sort codes, passwords, etc. There is plenty of software available both commercially and for free that can help secure your computer.
Never give out credit card details by email or to anyone cold-calling on you either in person or by telephone. Also be aware that banks and credit card companies should never ask you for your PIN number.
It’s best to memorise PIN numbers and avoid writing them down. Use different PIN numbers for different debit and credit cards and change them occasionally. You can change some PIN numbers yourself at ATM machines - making sure nobody is watching - or by asking the lender to issue a new one by post.
Checking account statements regularly is essential. If you spot anomalies, contact the lender. Checking your credit reference file can also be useful for ensuring credit isn't being used in your name; but do this sparingly as checking your file too often can reduce your ability to get further credit.
Watch out too for shop assistants taking your card away into the back of their shop or waiters in restaurants disappearing with it. You can ask them to process card transactions right in front of you and they will almost certainly have a mobile terminal on which to do this. It is particularly important to deny fraudsters the opportunity to “clone” your card by copying it onto a blank using a specially designed gadget.
Extra protection available from card issuers
Card issuing companies such as Mastercard and Visa increasingly offer fraud guarantee services - often extending to online purchases - that mean you won't be held liable for fraudulent transactions made without your knowledge. Sometimes these are free as part of a bundled deal or there is a modest charge. Compare credit cards online to see what deals are available.
Mastercard employs a service, developed originally by Visa, called "3-D Secure" that involves entering a password when using your credit card with participating online retailers. Visa offers the service under the name "Verified by Visa" and there are now other variants around. The 3-D system asks for a password of up to 20 characters and users have in the past mistaken the pop-up window as a phishing scam when directed to a different site - but it is now gaining wider acceptance and trust.
"Active card monitoring" is also widely available. Credit card providers monitor your account transactions for suspicious or unusual activity and will block any suspicious or unusual activity. This service can be a pain if you forget to tell your card issuer when you plan to use your account abroad - so think ahead.
Barclaycard and Capital One have taken the initiative to offer free help and advice if your identity is stolen.
Equifax additionally provides Capital One customers with free alerts if there are changes on their credit reference files. You can also register with Equifax and Experian (another major credit reference agency) for a modest fee if using other brands of credit card.
Summing up
A 500% rise in online transactions in seven years means identity theft and fraud is big business. Increased access to current technology by single-minded fraudsters - card cloning machines, etc - compounds this. Then there are the old-fashioned methods of criminals using stolen or lost documents to siphon accounts for unscrupulous use.
Take care to compare credit cards if you seek peace of mind. Make time to find out how to use any added security features on your chosen credit card and you should then have trouble-free use - whether at home, abroad or over the worldwide web.
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