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Watch out, the tricksters are after your credit card
Swiping takes on a new meaning as sophisticated crooks perfect techniques to quickly relieve you or your bank of money, writes LUCIENNE FILD
Credit card fraud is on the rise, not only in SA but worldwide. Banks are losing millions each year as fraud syndicates and their equipment become more sophisticated. SA is also becoming attractive to international fraud syndicates, so much so that international card providers now consider SA to be one of the highest risks in the world when it comes to credit card fraud. The authorities recently uncovered an international syndicate producing counterfeit credit cards locally. Unlike UK banks, which suffered £122-million losses in card fraud last year, local banks refuse to disclose the extent of card fraud. But it is believed to be high, and rising. With the right equipment, your credit card can be easily compromised. Have you ever worried about your credit card when you hand it over to the waiter at your favourite restaurant?
Waiters, or shopkeepers, enlisted by a crime syndicate can skim the magnetic stripe on your card or take down your details, and then sell this information to tricksters. Skimming refers to conmen sliding your credit card through a card reader which copies the details from your card's magnetic stripe. These details are then used by a crook to "purchase" goods from an "obliging" merchant. The merchant is paid by the bank, and shares the spoils with the crook, even though no real purchase was made. Archie Kot of American Express says cardholders often only discover their card has been compromised when checking their monthly statement. Because card fraud is so common, banks offer lost card protection insurance cover - usually, at a low fee. In return for this fee, the bank accepts liability for purchases made between when your card is stolen, lost or compromised and when you report it to your bank. Bear in mind that the bank picks up the tab - unless you are proved to be grossly negligent - for the fraudulent use of your card after you have reported it missing. If you fail to report your card is missing immediately after discovering it, your bank will call you negligent, and any loss will be for your pocket. If your PIN number was in your wallet with your card, the bank will rule that you were negligent. Gerald Kitchen, Nedbank card division GM, says while the lost card protection fee is optional on most cards, it will probably become compulsory. The average loss per stolen, lost or compromised card is R3 000 to R5 000 at Nedbank, says Kitchen. The postal service has also turned out to be a security risk - thieves intercept cards before they reach their legal owner. Some banks and card providers now use private courier services to deliver new cards to their clients. Edgar Blomeyer, deputy GM of card and electronic banking at First National Bank (FNB), says credit cards are susceptible to fraud because they are signature-based rather than PIN-based. He says there will be a move towards using PIN numbers together with your credit card at shop terminals, instead of just a signature. Peter Abbott, divisional GM of Standard Bank's card and telephone banking services, strongly advises credit card holders to take out lost card protection. Standard Bank, FNB and the Absa banks charge credit card holders R18 a year for lost card protection, while Nedcor banks charge R20. (FNB and Absa gold cardholders get the cover for free.) With Standard Bank, FNB, and Nedcor the lost card protection cover is optional. Absa deducts this fee automatically, but will waive it when clients feel strongly about not wanting lost card protection. If you hold an American Express charge card, your account is automatically debited with a hefty R34.20 a year for lost card protection, but if a client does not want this cover the fee will be refunded. If you hold an FNB card, you have only seven days to report your card lost or stolen; after that you become liable. Other banks apply a "reasonable" time limit.
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