Contents

1What to do when your credit card is misused? 1.1Sign at the back of Credit Card 1.2The CVV Number of the Credit Card 1.3 Do not give xerox copy of your card to any Agent 1.4Do not give your credit card number 1.5Aware about your Credit Card Number theft during ATM cash Withdrawal 2Types of Card Frauds 2.1Lost and stolen card fraud 2.2Counterfeit card fraud (also known as Skimming) 2.3Card-not-present (CNP) fraud 2.4Mail-intercepted cards: 2.5Identity theft on cards 2.6Application fraud 2.7Account take-over

[top]What to do when your credit card is misused?

I OWN a credit card and have never revealed my PIN number to anyone. Neither have I ever used my card to withdraw cash from any ATM cash point. But, money has fraudulently been withdrawn using my credit card number. I can prove that my card has never been out of my possession and that there is no necessity for me to withdraw money from ATM cash points, which attracts an interest rate of 36 per cent. The card authorities are taking shelter under irrelevant rules and terms and conditions.
Can any technical or legal expert, well versed in electronic funds transfer, tell me what a common man caught in such a situation can do to protect himself?

This letter by a reader appeared in “ The Hindu” about four years ago in their Consumer Notes column. To be frank I do not remember if any expert provided this exasperated reader with any solution. Plastic money was not my favourite during those days. With the result, I did not pay much attention to this problem. But things changed when I started flaunting a credit card. Various reports that I came across on a variety of credit card related frauds opened my eyes to the growing magnitude of this problem and thus began my search for various safety measures that a cardholder should adopt. Though most of these are sent by the card issuer at the time of providing a new card, the fine print with which they come and the euphoria of getting a glittering piece of plastic are sufficient to take our attention away from the safety aspects. This write up is an attempt to describe some of the common areas of credit card frauds and the precaution that are needed to avoid ending up a victim.

[top]Sign at the back of Credit Card

To start with when you receive a new credit/debit card. ensure that you affix your signature in the space provided for the same at the back. An unsigned card gives more scope for manipulation. A separate communication is also mailed to you providing a PIN-Personal Identification Number. Memorize this PIN and destroy that communication to avoid this number being seen by others. All ATMs have a provision for changing the PIN if desired by the cardholder. Those of you who wish to do so ensure that the changed number is something you can easily remember. Do not use numbers that can be guessed by anybody like your date of birth or employee id number etc. Never write down the PIN anywhere. I have seen people writing down their PINs in their Pass Books and also a few on the back of the card itself with marker pens. Such habits do not augur well for the safety of your money.

[top]The CVV Number of the Credit Card

The next important area of your card is the CVV number, which is the last three digits (or, four in some cases) of a number printed on the back of your card. This is the card verification code that is used in on-line transactions and also presently a major area on which frauds occur. Any one can use the card for on line purchases if this information is available with them. If you are in the habit of making online payments from a secure connection, say, your home, it will be ideal if you note down this number and keep it in a secure place for use while at home and to blot it out immediately on the card. For example if you give your card to a waiter at a restaurant, what is there to stop the waiter from writing down your credit card number and placing orders on the phone with it later? Any dishonest employee of a departmental store can do the same if he can remember your CVV number, since the entire card details like number & name are available in the billing system of the super market.

[top] Do not give xerox copy of your card to any Agent

Another variant of this trick has been doing the rounds recently. There is any number of Direct Selling Agents for these card-marketing companies. Some of them ask for a Xerox copy of the front and reverse side of your existing card luring you with an offer to provide increased credit limits. If you comply with their request, the safety of your card vanishes in the cyber space. If you come across such agents, flatly refuse to give a Xerox copy of your card. Also report the matter to the concerned card-issuing bank.

[top]Do not give your credit card number

Yet another con job on similar lines was recently reported at Chennai. Some of the leading banks had provided a software facility to five-star hotels and certain recreational clubs allowing them to debit a credit card account without swiping the card. The establishments need to just key in the customer’s credit card numbers with his or her consent before the transaction. In the instant case, Janakiraman, a computer engineer, had not given permission for the transaction, yet the amount was withdrawn from his account. He was among a dozen others who were informed by a recreational club that they had been chosen to receive gifts from it. They were asked to come to the organisation’s office in Abhiramapuram where they were asked to provide credit card numbers and other personal details. They were then persuaded to become members, paying Rs.35,000 and in return, promised a free trip abroad. Mr. Janakiraman, who had provided details, however, declined the trip offer. Yet, Rs.15,000 was charged on his credit card account the next day. Based on the complaint of the victim, the police have arrested the general manager of the club.

[top]Aware about your Credit Card Number theft during ATM cash Withdrawal

When you use the card to draw money from any ATM center, stand close to the machine and ensure that you are using your spare hand to shield the card number and PIN input from any prying eyes are hidden cameras. Be aware of your surroundings before you attempt to draw cash. If there is too much of a crowd inside any such cash machine, better use another one. Do not accept help from well-meaning strangers and never allow yourself to be distracted. Once you have completed a transaction, discreetly put your money and your card away before leaving the cash machine. Dispose of your cash machine receipt, mini-statement or balance enquiry with care. Tear up or, preferably, shred these items before you discard them. If the machine retains your card, inform the bank or service point immediately. It is ideal to carry with you some proof of your id to claim the struck up card from the bank.

[top]Lost and stolen card fraud

– a card is physically stolen from your wallet or home, or it is lost, and is then used by a criminal, posing as you, to obtain goods and services. Most fraud of this type takes place before you have reported the loss. Ideally it is better to carry your cards separately from your wallet, preferably in a zippered compartment or pouch. If your credit cards are lost or stolen, contact the issuer(s) immediately. Most credit card companies have toll-free numbers and 24-hour service to deal with these emergencies -- they are eager to avoid credit card fraud. Note down their number and inform them the details of your lost card at the earliest. Ask them for some confirmation code for having received this message from you. This will enable them to hot list the card and prevent its further misuse. Invariably follow it up with a letter to the card issuer. Legally the moment you have made a written complaint to the card provider and the provider has acted upon your complaint then you no longer have to make a payment for the unlawful purchasing.

[top]Counterfeit card fraud (also known as Skimming)

– a counterfeit, cloned or skimmed card is one that has been printed, embossed or encoded without permission from the card company, or one that has been validly issued and then altered or recoded. Most cases of counterfeit fraud involve skimming, a process where the genuine data on a card's magnetic stripe is electronically copied onto another card, without the legitimate cardholder's knowledge.

Skimming can occur at retail outlets – particularly bars, restaurants and petrol stations – where a corrupt employee puts your card through a device, without your knowledge, that electronically copies the data from your card’s magnetic stripe. Sometimes skimming takes place at cash machines where tampering has occurred and a skimming device has been fitted (see below). The information is usually then sold on higher up the criminal ladder where counterfeit cards are made. Often you will be unaware of such fraud until your statement arrives, showing purchases that you did not make. Therefore it is imperative that you open credit card bills promptly and make sure there are no bogus charges. Treat your credit card bill like your checking account -- reconcile it monthly. Save your receipts so you can compare them with your monthly bills.
This type of fraud more common in western countries is slowly on the raise here too. Chennai, Bangalore, Mumbai & Delhi have reported their share of this scam. In June this year the Bangalore police have busted a well-networked international credit card fraud, which they stumbled upon while investigating some other case. The police arrested three people who had connections with agents in the US and recovered materials, that includes 114 original ‘colour’ credit cards and 15 ‘white’ cards. The gang operated with the help of agents in the US, who sent them stolen and lost credit cards, mostly belonging to NRIs. At the same time, they send them ‘white plastic’ cards, which are plain counterfeit cards, containing a magnetic strip with data of some other credit card user, whose card has been ‘skimmed’. The agents send the cards to people in Bangalore. Using a software, they transfer data from the white card to the original card. They use these cards to purchase electronic goods and later sell the goods at cheaper rates. 20 percent of the profit is sent to the agents in the US. Malaysia & Singapore are two major hubs in Asia where basic cards are imported and sent through agents for use in our country. The latest is the Skimmer, a small palm-held device in the shapes of cigarette packets or pagers, widely used abroad to counterfeit cards and they are sure to have reached India too. The number of skimmed cards that are flooding our country provides an indication for this.
.

[top]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. It is now the largest type of fraud in the UK.

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. This means that:CNP businesses are unable to check the physical security features of the card to determine if it is genuine. Without a signature or a PIN it is not easy to confirm that the customer is the genuine cardholder card issuers cannot guarantee that the genuine cardholder has given the information provided in a card-not-present environment.

To prevent this type of frauds, cardholders need to be cautious. Be very careful to whom you give your credit card. Don't give out your account number over the phone unless you initiate the call and you know the company is reputable. Never give your credit card info out when you receive a phone call. (For example, if you're told there has been a 'computer problem' and the caller needs you to verify information.) Legitimate companies don't call you to ask for a credit card number over the phone. Never respond to emails that request you provide your credit card info via email -- and don't ever respond to emails that ask you to go to a website to verify personal (and credit card) information. These are called 'phishing' scams. Never provide your credit card information on a website that is not a secure site. Do not click on links in email seeking details of your account, they could be phishing emails from fraudsters. Most reputed companies will ask you to visit their website directly. While using a credit card for making payments online, check if the website is secure. The CVV will also be required.

[top]Mail-intercepted cards:

This type of fraud involves your card being stolen in transit, once it has been sent out to you from your bank. If both you and your spouse are working, there will be nobody at home to receive the mails. Such people are at greater risk for this type of fraud. If both of you happen to be working, then better give your office address for delivery of cards. Several cases of billing without getting the cards have been reported. Investigations in one case revealed that a newly issued card was used by the delivery boy of the courier firm to go on a spending spree with his friends.

[top]Identity theft on cards

– this occurs when a criminal uses your fraudulently-obtained personal information to open or access card accounts in your name. There are two types:

[top]Application fraud

– stolen or false documents are used to open an account in your name. Criminals steal documents such as your utility bills and bank statements to build up usable information. Alternatively, they may use counterfeit documentation for identification purposes.
In one case reported from Chennai, the accused had allegedly cheated the bank right from the stage of submitting the application — the first step to obtain a credit card. An agent from Triplicane submitted 100 applications with a bank seeking credit cards in January. When verification officials visited the households, the resident would confirm that they had applied for the card. It transpired that the agent had given some money to each applicant and used the cards in their name to siphon off nearly Rs 1.39 crore before absconding. However, he was arrested later. In another case, police found that the accused had withdrawn money and purchased goods after forging the signature of the genuine card holders. Frequently, unwitting residents receive bill statements from banks for cards that they do not hold.

[top]Account take-over

– by obtaining key personal information criminals are able to take over the running of your account. By pretending to be you the criminal will try to deceive your bank or card company and arrange for payments to be taken from the account. The criminal may also instruct the bank to change various details of the account, such as the address, and then ask for new cards and cheque books to be issued.
In many cases the fraudster uses the telephone to inform the bank of a card loss and requests the bank to send the card to a new address as he is on the move. Actually an MNC bank which is one of the biggest players in India went on air some time ago advertising their customer friendly nature by delivering the card to the customer at a new location. "Banks are more customer oriented these days even when there is a change in address. And this is the root cause of all problems."


In India, credit card fraud is mostly limited to the physical space. Online con jobs make up just about 1% of the total numbers here, unlike 40% in the developed world.

But, as consumers graduate to the shop-easy internet and pay with their cards, instances of fraud are bound to rise. As J Y Umranikar, additional DG, Maharashtra CID, says, “(While) we don’t have statistics, as access to the web increases, reported cases of card fraud will rise 20-30 % every year. And this is only a surmise based on past experience.’’ Umranikar insists that in online transactions, contracts are one-sided and the customer is always held responsible in case of fraud.

Phishing, where a consumer gets a fictitious email from a fake site or blog seeking sensitive card information, is a commonly-used defrauding mechanism. To top it, “people are careless in offering their card details,’’ he adds.

Times of India reports the following: While consumer organisations TOI spoke to had little information about online fraud, card companies say it is increasing in e-ticketing, eshopping and the service sectors, where no physical delivery of goods is involved. Shockingly, B Madhivanan, general manager at ICICI Bank, informs that 60% of online card fraud occurs only while buying an air ticket. The following case is also provided in the said report:

In April this year, a 26-year-old Mumbai executive keyed in her credit card number and the three-digit security code on the e-booking site of an airline. She bought a ticket for Bangalore. In July, she was shocked to find a Rs 20,000 additional credit drawn from her account. “Two tickets from the same airline were booked on two different days in June using my card,’’ she says. The first was a Dwarka-Mumbai ticket for Rs 6,000, and the other, a Delhi-Dubai one for Rs 14,000. She did not get a response from her card company till August. “Then I approached the police to file an FIR. But they told me they did not know what a credit card was.’’ Exasperated, she went to the cybercrime cell, which in turn asked her to first lodge an FIR with the police.

She got a cybercrime officer to speak to the police and finally got her complaint registered. On receiving a complaint, card companies say, a consumer is given a temporary credit that matches the disputed amount, and a case is resolved in a maximum of 60 days. The Mumbai executive , though, has been waiting for almost three months now. For safer transactions, an advanced card such as Verified by Visa (VbV) and Mastercard SecureCode comes in handy. Here, a consumer requires a password during a transaction to validate his identity.

Nowadays the usage of credit cards has seen a significant rise and so has the happenings of credit card fraud. People are shopping by sitting in the comfort of their home with the help of credit cards. It is not easy for the victim of a credit card fraud to get his/her credit card back as you have to go through a very complex process, as revealed by the above case study. I have attempted to cover various areas where a card holder can be tricked and also a few methods to avoid getting trapped. Nevertheless, this is not an exhaustive analysis and can never be, as newer methods are constantly devised by the con artists to cheat the gullible public. To conclude, I have but one advice.

Always use common sense -- it is the best rule of thumb.


Resources:

1. http://www.scambusters.org/CreditCardFraud
2. Information for Cardholders
3. http://www.barclaycard.co.uk/persona...rd-fraud/index
4. Cyber Crime Cell, Mumbai: Preventing credit/debit card fraud
5. News reports from The Hindu, The Times of india & The New Indian Express

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