Beware, you could become a victim of credit card fraud

Beware, you could become a victim of credit card fraud

JAKARTA (JP): The use of credit cards has made life easier,
more convenient and more secure at least against pickpockets and
other street criminals. But beware, the use of credit cards has
also created another type of criminals.

Credit card fraud comes in many different forms and takes
place everywhere. The technology used by the fraudster is often
so sophisticated that the card owner is often unaware that he has
become a victim.

Many forms of credit card fraud have also taken place in
Indonesia. The credit card fraud, which was unveiled by the
police in Denpasar, Bali recently is, for instance, one of the
most commonly used types of credit card fraud in the world.

In the Bali case, the man used a credit card under his own
name but the card carried other people's credit card numbers.
This type of credit card fraud is difficult to detect except with
the help from the card issuer.

According to the police, the man, who was arrested following a
tip from the card issuer, could be a member of an international
syndicate. At least 170 different credit cards were found in the
man's house. All were "issued" under his name but with fake
numbers.

The type of the fraud conducted by the man could be
categorized as counterfeit card fraud.

According to the United States-based credit card fraud watch
portal verifyfraud.com, a counterfeit card is created when a
fraudster has the possession of your card number. He or she then
uses the coding of your magnetic strip to create their own card
with their own name printed on the front.

For example, Suprianto Ahmad's name appears on the front of
his card and is billed to number 2225-23456-4567. A fraudster
then creates a counterfeit card and prints his own name on the
front of the card but uses Suprianto's card number 2225-23456-
4567. When Suprianto receives the monthly bill, he finds millions
of rupiah in charges for purchases he did not make.

The counterfeit card is one of the most common types of credit
card fraud. Other types of fraud are, for example, in the form of
account takeover and postal intercept fraud.

Account takeover

The account takeover fraud occurs when a fraudster obtains
your personal data. Often they do not need your actual card
number. Once the fraudster has your information, he or she will
contact your credit card company and change the address on your
account.

Next, the fraudster will call and report your card lost and
request a card replacement. The new card is then sent to the new
billing address on the account. This type of fraud is also
popular and does not require the technology of a counterfeit
card.

Card issuers often link PIN numbers and other information to
the new card automatically. The fraudster can then access cash,
and sometimes even have access to the checking account
information that you provided to your credit card institution.

Postal intercept fraud starts when a person intercepts your
credit card number through the mail.

When a criminal is able to intercept a preapproved credit card
application from a consumer's mailbox, all he has to do then is
have the address changed. Some credit card issuers will make a
change of address without requiring any further verification and
subsequently the new credit card will be mailed directly to the
criminal. The actual cardholder never has a clue what has taken
place until after the fraudulent charges show up on his own
personal statement.

One of the openings for credit fraud comes in the form of the
consumers' credit report. Although credit report information is
supposed to be kept confidential and only released for legitimate
purposes, the fact remains that it is relatively easy for
criminals to get a hold of consumer credit reports.

Many employees of credit card issuers, banks or retail stores
have the ability to gain access to credit reports on consumers to
determine their creditworthiness or potential risks.

Unfortunately, allowing such a large number of people to have
access to these reports means that consumer credit reports could
end up in the wrong hands, and that is when credit card fraud
begins.

The information contained in those reports gives the criminal
exactly what he needs in order to assume a new identity -- along
with a falsified credit history. If you have not done so
recently, it is strongly suggested that you check your credit
report for unfamiliar transactions.

Other sources of personal identity information (such as social
security numbers in the United States) and personal account
number also contributes to this accessibility.

The most common occurrence of credit card fraud takes place
when items containing personal information (such as wallets,
purses, briefcases) are lost or stolen. This obviously gives the
criminal direct access to the information contained on your
driver's license, social security card, credit cards and the
like.

Fraud prevention

How to prevent fraud?. Many credit card companies have adopted
common preventive measures to protect themselves and their
customers.

Credit issuer computers are programmed to send out an alert
when a certain pattern is detected. One such pattern is known as
the "abnormal usage pattern" -- such as when a card that is
normally only used for small local purchases is suddenly being
used in an attempt to transact a large purchase.

Another term is called "common fraud pattern" which occurs
when a card is used for a series of purchases within a day.

Patterns such as these will result in a "hold" being placed on
the account, meaning the charge will be denied and you will be
asked to call the credit card issuer to verify that you are the
actual card holder.

Ellyana Fuad, Visa International's country manager for
Indonesia said that Visa's strategy to counter fraud was clear
and focused, involving a steady flow of new antifraud programs,
risk management policies and technological solutions to control
credit card crime.

She said Visa had a wide range of anti-fraud practices
including card security features in the manufacturing of cards
worldwide in order to prevent counterfeiting.

In addition, the card holder risk identification service
(CRIS) adopted by Visa enables it to notify an issuing bank in 10
minutes of a potentially fraudulent transaction actually taking
place anywhere in the world.

"This kind of smart data means that a Visa member bank can
almost immediately notify the cardholder and take action to close
down the card account if necessary," she told The Jakarta Post.

Ellyana said that Visa was also working with member banks and
partners to change from the magnetic strip cards to chip cards to
prevent credit card fraud.

She, however, said that the move to chip cards could be
achieved only in the long term. "In the interim, fraud control
relies on strong, traditional and fundamental operations in each
member bank in any country.

Citibank Indonesia's card business director Paul Asveen said
that a number of proactive prevention measures has been in place.

"For, example a verification is required if the customers are
using the card at "unusual" merchants or the customers are using
the card with a very high amount," he said.

The simple way to prevent fraud is that you should take care
of your credit card carefully and if your credit card is stolen
or lost, report it to the credit card issuer immediately. Banks
will then freeze the account and give you a new card.(hen)