Credit card fraud - keep your details secure and avoid being scammed
With $100 million worth of funds stolen in Australia each year, credit card fraud is something you need to take seriously. This article examines the most popular credit card scams, and how you can avoid them.
An easy mistake
When Samantha screwed up her shopping receipt and threw it away, little did she know that it could have turned out to be a very expensive mistake. Printed on this receipt was her credit card number, expiry date and name : all the information needed for anyone to make internet or telephone purchases with her card in an illegal spending spree restricted only by her credit limit.
Later that month, Samantha received the statement from her card provider detailing dozens of unauthorised transactions. Samantha was shocked; how on earth could this have happened?
What are the most popular credit card scams?
There are a number of ways to fraudulently obtain a person's credit card details:
- by acquiring discarded receipts;
- by intercepting new or replacement cards sent through the mail;
- by following unsecured online transactions;
- from retailers who retain credit card information from consumers to use unlawfully; and
- through skimming.
Once a person has illegally obtained your credit card details they can:
- make purchases where a signature isn't required, such as over the telephone or internet;
- use equipment to create a duplicate card; or
- access your card account.
The popularity of internet shopping has seen an increase in online fraud, seeing spyware designed to steal personal information entered into an unsecured internet site, hoax emails asking for credit card details or emails supposedly from financial institutions asking customers to log in to a certain site by entering confidential information regarding their credit card number and password.
Always be extra careful when using your credit card over the internet. Never respond to emails asking you to follow a link and enter your confidential card information on the site you're directed to. Never enter credit card information into a form on a web page which is not secure – a quick way to see if a page is secure is to check for a small padlock item at the bottom of your browser (although, this in itself doesn’t guarantee a trustworthy site).
What about telephone purchases? Or email?
Never give credit card information out to a person who telephones you, regardless of who they claim to be. Only give card details over the phone when you initiate the call.
Credit card information should never be sent by email. Emails are not secure and should only be used for non-confidential information.
What is "skimming"?
Credit card skimming involves copying card information using a magnetic strip reader. This could happen at an ATM, where perpetrators fit the reader on the card slot. They also sometimes fit a small camera close by, to record each person entering their PIN.
Skimming can also occur at a shop where your card is swiped twice. Once through the standard machine which registers your charge and once through a magnetic strip reader which records the card information.
Once your card information is recorded by the magnetic strip reader, it can be transferred to a blank card, ready to be signed and used by the thief.
In Australia, $100 million every year is stolen through credit card fraud with almost half of this being as a result of skimming. In November 2005, a Malaysian gang working in Melbourne and Sydney skimmed card details of over 100 ATM customers. They finished up with a haul of more than $623,000. Thankfully, they were caught before any more damage could be done.
How can I avoid this happening to me?
Never let your card out of your sight. If a merchant attempts to swipe your card through more than one machine, contact the fraud department of your provider. Don't confront the merchant.
For these reasons, credit card users are much more protected when using 'smart' credit cards. Implanted within the 'smart' credit card is a tiny computer chip which prevents the card from being skimmed. These cards are currently being used globally, although they are not foolproof and stories are emerging of chipped cards being skimmed.
What should I do if I suspect illegal transactions?
If your credit card is lost or stolen, or you believe someone has managed to unlawfully obtain your card details, it is essential you inform your card provider immediately. They will put a stop on your card, preventing it from being used.
If you have a query about any transactions on your statement, telephone your provider immediately. They are obligated to investigate your query and during the period of investigation the disputed transaction is suspended, meaning no interest is charged. If it is found that the transaction is unlawful, your account will be reimbursed.