Credit card fraud 'on the rise'

Wahyoe Boediwardhana and Urip Hudiono, The Jakarta Post, Denpasar/Jakarta

Credit card holders, beware!

Scams targeting plastic money are on the rise, and are becoming more sophisticated by the day, according to the Indonesian Credit Card Association (AKKI).

Take your eyes off your valuable card for even just a second, and you might well be among the victims of rip-off schemes that last year alone caused losses of some Rp 40 billion (US$4.3 million).

In the early days of credit cards, conmen only had to use a little sleight of hand to steal and then forge the holder's signature. But protecting your card now is much more difficult.

"The `pickpocket' method was used back in the 1980s," AKKI risk management coordinator Dodit W. Probojakti said during a discussion on credit card fraud prevention on Thursday.

"Now they are deploying state-of-the-art equipment in their scams."

In this digital age, Dodit explained, credit card fraudsters now use "skimmer" machines to read and duplicate the personal data encrypted in the magnetic strip of a card.

They do not even have to get hold of the card anymore, as they can tap directly into telecommunication lines used for credit card transactions and intercept card data.

Meanwhile, as using credit cards for online transactions becomes more common, "phishing" techniques have also developed, in which conmen claiming to be employees of credit card issuers contact unsuspecting card holders and sweet talk their way into obtaining data.

In the end, everybody loses -- card holders get huge bills, and then complain bitterly to credit card issuers.

Speaking at the same occasion, AKKI chairman Budy Setiawan said that though losses account for only 0.3 percent of the Rp 14 trillion credit card transactions in 2004, the trend in fraud cases was particularly alarming, spreading to almost every major city in the country -- Jakarta, Bandung, Yogyakarta, Surabaya, Balikpapan, Makassar, as well as in Bali.

Data from AKKI shows that there are currently 5.5 million credit card holders in Indonesia, and growing steadily at some 30 percent each year.

Meanwhile, Bank Indonesia deputy director for accounting and payment systems, Bramudija Hadinoto, said that a high level of credit card fraud would obviously affect Indonesia's image in the financial world, as well as the country's economy as a whole.

Indonesia has just recently been taken off the Financial Action Task Force's money laundering blacklist, which had caused the country to incur additional costs when conducting international financial transactions.

Acting on the situation, Bramudija explained that the central bank had recently issued a regulation requiring that all credit card issuers in the country utilize credit cards that use "smart chips" instead of magnetic strips by year 2006.

"We expect that all new credit card holders will receive such cards by then, while existing card holders will gradually have their cards replaced," he said.

The country's criminal justice system will also act on credit card fraud, with Supreme Court vice justice Mariana Sutadi ensuring that all district court judges are trained to handle credit card fraud cases and that they hand down deterrent sentences.

The Bandung District Court recently sentenced a credit card fraudster to four years in jail, while the Denpasar district court sentenced another to three years.