Credit Card Fraud and How to Avoid It

The most common crime involving credit card is counterfeiting. Statistics for 2005 reveal that US$ 126,824,292 was lost due to counterfeiting. Most credit card fraud occurred in the United States. Among the states, California has the highest reported cases of credit card fraud.

Organized crime groups are known to have mastered the art of counterfeiting credit cards. They have acquired the technology to read the black strip at the back of credit cards and interpret the information therein. The technology has the capability to copy the hologram in the legitimate card and makes it look genuine. With a card that looks real, gangsters can use them in their shadowy business.

Recently, technologically advanced cards started to appear in the market. These cards have “chips” similar to that of a computer rather than the usual black strips. The chip is a microcomputer embedded in the card that stores account information and PIN of the cardholder. Proponents of this technology claim that it is next to impossible to counterfeit chip cards.

The other type of credit card fraud is the so-called “card-not-present fraud.” This type of credit card fraud is committed without the physical presence of card, usually during online, phone or mail orders transactions. The modus operandi is for telemarketers and fake internet providers to peddle bogus products and obtain information from credit card holders. Once the information is obtained, criminals could then use the information for illegal purposes.

Card-not-present fraud accounted for more than US$28 million or 10 percent of all dollars lost through credit card fraud. Verifying the legitimacy of a telemarketer or a website protects the cardholder from falling into this kind of scam.

Cards obtained through false applications account for 4 percent of total losses. This is identity theft. Criminals obtain personal information of their victims such as names, addresses, birthdays, Social Security Numbers, bank accounts and other information. They use the information in applying for credit cards, making personal loans, or open bank accounts.

A quick call to the credit card company that issued your credit card or card is the action to make when you lose your purse or wallet. The credit card company will then issue a “fraud” warning on your account.

Protect yourself from credit card fraud. Some simple ways can help you achieve this. The first rule is to memorize your PIN number, never write it down. In selecting your PIN, use a variety of letters and numbers. Use of names and numbers associated with you must be done away with. Moreover, never disclose your PIN number.

When using your credit card, make sure to use your body to cover the monitor when you enter your PIN number. Before using a machine, make sure that nothing is protruding from any of the slots. Some criminals are so smart they have inserted some kind of plastic into the slots of machines that makes you think the machine has captured your card.

After a transaction, promptly take your card and transaction records. For every transaction exercise caution – be watchful, be wary and be wise.