Avoiding Credit Card Fraud



The huge boom in credit card options and availability has resulted in an equally large boom in credit card fraud. An estimated £500 Million was lost to fraudsters last year, and that figure looks set to climb even further.



How to protect your cards



The first step is to make sure your credit cards are kept in a safe place, both at home and whilst you are out and about. A sizable percentage of the credit card fraud mentioned above occurs when cards are stolen by pickpockets (who often work in teams). The thieves then go on a spending spree, often before the rightful owner even realises the card is missing. To avoid or reduce the risk of this you can employ a couple of simple techniques. Firstly, always try to keep your wallet/purse in a zipped or buttoned inside pocket. If no inside pocket is available, the front trouser pocket can be used. Avoid patting your pockets to check if you wallet is there, this can alert a watching thief of its location. Finally, don't walk around in a daze! Be aware of people around you, especially in crowded areas.



It doesn't stop there



Pickpockets are certainly a problem, but you are more likely to fall foul of more sophisticated fraud methods.



Skimming

Any time your card leaves your sight (in restaurants, shops, etc) you are open to fraud. Skimming is a method that involves a member of staff in a restaurant or shop. When you hand over your card, the crooked staff member takes it and passes it through a small device called a skimmer. This stores the information on the card and allows it to be duplicated. They will then charge your card the cost of your meal/purchase and hand it back, with you being none the wiser.

Our advice here is to NEVER let your card leave your sight. It only takes a few seconds to skim a card, so even this amount of time is too long. Chip and Pin cards are making this method of fraud less prevalent, but it is still costing millions each year.



Phishing

This method is on the increase, mainly due to the massive surge in online spending. Thieves send you an email that appears to be from your bank or Internet service provider or retail website (Ebay, Amazon, etc) linking you to a fake website which asks that you verify personal information or input your password. The request is often backed up with threats that your account will be terminated within days of you do not reply. Don't respond in any way; financial service companies, banks and Internet service providers and reputable online stores NEVER ask you for information in this manner.



Card-not-present (CNP) fraud

This includes fraud conducted over the Internet, by telephone, fax and mail order. It is perpetrated when criminals obtain card details through the theft of your card details from discarded receipts or by copying down your details during a transaction. The problem in countering this type of fraud lies in the fact that neither the card nor the cardholder is present at a till point in a shop. CNP fraud is now the largest type of fraud in the UK. The only way to reduce your chances of being caught by this scam, is to be very cautious about who you give your details to. Sticking to reputable websites/mail order companies is probably the easiest measure you can take.



Shoulder Surfing

Despite sounding like a new extreme sport, shoulder surfing actually refers to one of the simplest methods of fraud. Thieves will peek over your shoulder as you use a cash machine (or Chip and PIN keypad), remember your PIN number and then steal your card at a later time. Usually by means of a pickpocket, but cases where the cardholder has been followed home and then burgled are not uncommon. Always shield the keypad when inputting your PIN and be aware of the person behind you. More sophisticated methods of this fraud can involve tiny cameras and skimming machines inserted into the card slot at a cashpoint.



Rummaging Through Your Rubbish

As unsavoury as this might sound to you or us, thieves are actively searching through peoples rubbish to find a whole host of useful information. An amazing number of people simply throw their credit card receipts and back statements in the bin and leave it out on the side of the road. This has become a open invitation to fraudsters (as reported by the BBC here).

Always shred any documents relating to your finances before throwing them away. It only takes 1 credit card receipt for a clever fraudster to be able to duplicate your credit card!



Mail Theft

As reported in 2005, the amount of mail being stolen by organised gangs is on the increase. By having a members working in sorting offices, these gangs are able to intercept new cards being sent out as well as the PIN numbers, which follow in separate letters. Experts believe this increase is due to the added security Chip and PIN cards offer against skimming, etc.



A Bit of Good News…



UK law states that cardholders are not liable for fraudulent purchases made on their card as long as it remains in your possession. In cases where your card has been stolen (or lost) and used fraudulently, the Consumer Credit Act states that you will be liable to pay up to £50 damages.



What is Chip and PIN?

Chip and PIN cards are helping to combat fraud by adding two new security measures to the common credit card. The Chip part of the card is a microchip which stores your information much more securely than the old magnetic strip. This makes it much harder to counterfeit. The PIN part is the addition of a unique 4-digit number you will need to enter before your card is accepted. Whilst these security measures are by no means fail-safe, they do reduce the chances of fraud considerably.