New figures show credit card fraud is getting worse for Australians — but also provide some handy reminders on how to reduce the chances of your card details getting ripped off.
Even if you don't lose any money, having your credit card involved in some kind of fraud is a major hassle. Last year, my bank rang me to inform me that "suspicious activity" had been detected using my card number and that as a result, they were going to cancel and reissue it. While I was very grateful for their vigilance, having to change all my automatic payments and online store accounts was a nuisance I could have done without.
It is, however, a nuisance that is becoming more and more prevalent (though still not astonishingly common). According to annual figures from the Australian Payments Clearing Association, in the 2007-2008 financial year, credit card fraud on Australian institutions amounted to $132 million. While that was only a tiny percentage of the overall market (0.02% by transaction numbers or 0.05% by transaction value), it was an increase on previous years. In 2006-2007, credit card fraud accounted for 39 cents in every $1,000; for 2007-2008, that number was up to 50 cents in every $1,000.
A major factor in the rise, unsurprisingly, is the high number of card-not-present transactions — an inevitability when ordering goods online. While most online stores use secure site technology and demand the three-digit CVV code as well as the card number, and many match this against the registered address of the card, the system isn't foolproof. 48% of fraudulent transactions related to card-not-present transactions, and it's a safe bet most of these weren't perpetuated using mail-in forms.
There's no absolute guarantee that you can protect your credit card details when shopping online, but there are plenty of steps to minimise any risk. Research any online store before using it — don't risk sending your details to an unknown vendor. Don't share credit card details via email, and don't do online shopping using public resources such as library or Internet cafe machines if you can possibly avoid it.
The next most common source of fraud is skimming, where credit card details are copied and duplicate cards are produced. There are obvious steps that can be taken to minimise this risk, including not letting your card out of your sight (don't hand it to waiters in a restaurant, for instance). If your bank offers a credit card with built-in chip technology, utilise it; these are much harder to duplicate.
"We estimate that within the next two to three years, the vast majority of Australian consumer cards will carry a chip and most processing terminals will be capable of using chip technology," APCA CEO Chris Hamilton said in a release announcing the figures. "Once transactions use chip-based authentication, opportunities for counterfeiting and skimming disappear."
The final common fraud option is much more low-tech: actual cards being stolen and re-used. Preventative measures are also similarly unglamorous: keep track of your card, don't leave it in a place where it can easily be stolen, and report any missing cards as soon as you can. (Consumers aren't liable for fraudulent expenditure once they've reported loss or theft.)
Security experts have often suggested that two-factor authentication, using biometrics or a smart card, will be essential to ensuring the future of online transactions as fraud rates continue to rise. Until those options become commonplace, however, common sense remains the best defence.
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