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)