The Never Ending Battle Against Credit Card Fraud

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In 2006 credit card fraud in Britain was said to have cost ?428 million, while in the United States the cost reached a staggering $750 million. This "white collar crime" is one that few fraudsters are ever fully punished for, due to the difficult nature of identifying the source of the fraudulent activity.

The compromise of credit card data can occur by many common routes, most of which are undetected by the cardholder. A simple example would be a shop assistant holding on to transaction receipts for use later. However, with the rise of the internet over the past ten years, database security lapses have become increasingly costly.

Stolen credit cards are usable until they are reported to the issuer and, while this is a relatively simple process with most issuers offering a 24-hour free phone number, the rise in popularity of online shopping over the past ten years has meant many fraudsters can manage to purchase thousands of pounds worth of merchandise before the issuer and, sometimes, even the card holder, knows the card is in the wrong hands. Some thieves may hoard a compromised account for weeks or months before indulging in any fraudulent activity, making the root of the criminal activity difficult to discover.

The only common security feature on all credit cards is the signature strip, but even that can be relatively easy to forge, leading many shops and merchants, particularly in the United States, to ask for photographic identification when customers attempt to make any payment via credit card. Even with this precaution, self-serve payment systems, such as the ones in petrol stations and some supermarkets, are still fair game to most fraudsters. Countermeasures such as asking for additional information i.e. a post code may deter some casual card theft but if the thief has stolen a wallet, address information wouldn't take long to find out if a driving license happens to be in there too.

Luckily, most banks and credit card issuers around the world are sympathetic to customers who are victims of card fraud, with U.S federal law limiting the liability of cardholders to $50 in the event of fraudulent activity or theft. Many countries have similar systems to the former, with customers merely having to compare credit card documentation with the issuer before signing an affidavit confirming that they knew nothing of the charges to their account. Banks also have sophisticated systems for detecting unusual card behaviour. For example, a large transaction that has taken place a long distance from the cardholders address would be flagged as suspicious and the bank would seek confirmation from the cardholder in question before dispelling any theory of fraud.

Unfortunately, while there are several precautionary measures cardholders and banks can take to battle against these crimes, there is no full proof solution to the problem, with banks and governmental agencies promoting vigilance and increased awareness of criminal's tactics as the best way to combat fraudulent behaviour in today's society.