Ellen Roseman: Keeping ahead of credit card fraudsters
Thursday, October 18, 2007 | 09:15 AM ET
Money Talks is a collection of daily columns from The Business Network, which airs weekday mornings on CBC Radio One at 5:45 a.m. ET (6:15 a.m. ET in N.L.).
By Ellen Roseman, personal finance columnist, Toronto Star
(Listen to the original audio)
You’re sitting at home when the phone rings. It’s a fraud investigator who tells you that your credit card has been compromised. A new card will arrive in the mail shortly.
How do they know? Banks have sophisticated software that picks up unusual patterns of credit card activity. A large purchase far from your home might be flagged as suspicious, for example, or multiple transactions in stores you never patronize.
Credit card fraud is a problem that keeps interest rates high for consumers and fees high for merchants. Eventually, we’ll have credit cards with embedded computer chips to make them more secure. But replacing all the credit card terminals across the country will take years.
Meanwhile, credit card data can be stolen by hackers who find a way into merchants’ computer systems. Remember TJX, the parent of Winners and Home Sense? This company kept too much data and didn’t secure it properly. Millions of credit cards were compromised and replaced in the past year.
Thieves can also obtain your full credit card number, and expiry date, from sales receipts. While your copy may have some numbers disguised, the merchant’s copy does not. Mandatory truncation could limit fraud, but Visa and MasterCard issuers let merchants keep sensitive customer information in case of refunds or exchanges.
Fraudsters order merchandise by mail or online, knowing the card can’t be inspected at the point of sale. Some merchants insist you supply a three-digit verification code, printed on the card but not in the magnetic stripe. Cloned cards often lack this code.
Debit card fraud is also a problem. The Interac Association is running ads about a test of chip technology for debit cards, which begins this month in Ontario. But not until 2015, eight years from now, will magnetic stripe transactions be phased out at the point of sale.
When thieves steal your credit card, you rarely lose money. The cost is covered by banks. But debit card fraud can hurt you. Banks may hold you liable for losses if they suspect you haven’t protected your personal identification number.
So, keep your PIN secure and watch out for people lurking behind you at bank machines or stores. They’re known as shoulder surfers.
-- Ellen Roseman
(Click on the comment link below to share your view)
« Previous Post | Main | Next Post »
This discussion is now Open. Submit your Comment.
« Previous Post | Main | Next Post »
Post a Comment
Money Talks »
Recent Posts
- Duncan Stewart: Investing in a clean technology index
- Monday, October 29, 2007
- Andrew Willis: Big oil, Alberta, and the new balance of power
- Friday, October 26, 2007
- Jim Bray: New trends in high-end audio
- Thursday, October 25, 2007
- Loraleigh Kovacik: Starting a small business
- Wednesday, October 24, 2007
- Todd Hirsch: What's the Bank of Canada thinking these days?
- Tuesday, October 23, 2007
- Subscribe to Money Talks
Archives
- October 2007 (18)
- September 2007 (4)
Categories
- Andrew Wahl (2)
- Andrew Willis (2)
- David Baskin (1)
- David Colman (3)
- Deborah Yedlin (1)
- Duncan Stewart (2)
- Ellen Roseman (3)
- Jacqueline Drew (2)
- Jim Bray (2)
- Kelly VanBuskirk (1)
- Loraleigh Kovacik (1)
- Peter Vincent (1)
- Todd Hirsch (1)
Comments
Stuart
Toronto
A simple way for banks to reduce the incidence of credit card and debit fraud using existing technology would be to allow their customers the option of receiving instant confirmation by email or text message of all transactions. Customers would know immediately if their card is being used illegally and would be able to notify their bank, possibly after the very first use. This would make credit card fraud much less lucrative and much more risky.
Posted October 18, 2007 02:05 PM
Dominique McMahon
Toronto
I do not understand why I need a picture ID to buy a glass of beer, but I can't get a photo ID for my credit and debit cards. It woudn't help with online fraud, but it would make me feel a little bit safter..
Posted October 19, 2007 12:06 AM
KW
Vancouver
For all my credit cards, there is an option to view your account status online, which I make extensive use of. It's a good way to see what transactions have taken place plus the credit I have left on your card [so I don't get hit by an overlimit fee]. I monitor/review my accounts regularly because some transactions take longer to be posted to the account. If I see something suspicious, of course I'd report it as soon as possible.
Posted October 19, 2007 01:43 AM