Credit Card Security
Ira A. Lipman
Some years ago a friend had the unpleasant experience
of having his pocket picked, losing a case containing a number of credit cards
and his driver’s license. Fortunately he kept a record of his credit card numbers.
He immediately notified each of the companies of the theft by telephone and followed the
calls with confirming telegrams. This prompt action assured that the card issuers were
notified before any bogus charges. Thus, our friend was spared any liability for subsequent
purchases made with his cards. This freedom from responsibility was important, because in
the time required to notify all the firms honoring the credit cards, charges amounting to
tens of thousands of dollars were made on his stolen cards.
The impact of credit cards on the nation's economy staggers the
imagination. The available purchasing power is enormous. Total credit limits are more than
twice as great as the nation's entire amount of money in circulation. Furthermore, the
increasing use of credit continues unabated. Any time and anywhere there is this amount of
assets, you can bet the ranch that the sharpies and the frauds are on the scene, standing
ready to fleece the unwary sheep — and that might be you.
Three elements of credit card fraud that directly affect you:
the use of counterfeit credit cards, the use of stolen cards, and the fraudulent use of
valid credit card numbers without the physical presence of the card.
Much of the impact of counterfeit cards has been countered by
technological advances. Those birds and monogrammed globes you find on credit cards are not
there to amuse your children. They are laser-generated holograms, which are incredibly
complicated and relatively expensive to produce, but the card companies realize that the costs
of unrestricted counterfeiting would be many times greater. While the credit card frauds may
be stymied at present, you may be certain that these cheats are working hard to produce
look-alikes designed to separate you and your money one way or another.
A less expensive way for a credit thief to rip you off is the tactic
used against my friend by the pickpocket, to wit, stealing his cards. For the high-volume
thief desiring a larger take, vendors sell lists of valid credit numbers. These are obtained
in a number of ways — pick pockets, robbers, burglars, prostitutes, addicts, light-fingered
juvenile delinquents, and dishonest bank employees (who may have access to the account
numbers of every one of the bank’s credit card holders).
Most of the activity on a fraudulently obtained credit card occurs
during the first three days of a thief's possession. After this time, the card will be sold
to another, or switched, perhaps by an accomplice, for a valid card. From this point, the
whole operation repeats.
As you might expect, Fridays are big days for credit card frauds. Not only
is the legitimate cardholder filled with the "thank God it’s Friday” spirit, but the card
abuser has two extra weekend days of grace to cheat and steal before Monday's " business as
usual " stems the tide of weekend theft.
Another group that, at the very least, abets the frauds is the merchants.
Their contribution is primarily apathy and carelessness rather than duplicity. Ask yourself
this question: When was the last time that your signature on the credit card was compared
with that on the credit voucher you just signed? Merchants also fail to check the list of
canceled cards or the card pickup bulletins that the credit firms issue.
Others are cheats, though. They print extra billing sets using your
card. They also cheat by violating no-authorization limits imposed on certain transactions.
Still other merchants are outright crooks. They will buy stolen cards, borrow or steal lists
of valid card numbers, and run them through as legitimate transactions, often splitting the
take with the list vendor.
Con artists may attempt to steal from you through the abuse of your
credit cards. They may represent themselves as "security officers” checking into illegal use
of credit cards. They will ask you for your card number in order to "verify" it. Do not give
your card number to anyone. Call the issuing company immediately.
Many cardholders themselves are credit card criminals. They
have only fifty dollars to lose, so they might think they can get away with simply reporting
the loss of their card, and then they go on a spending spree. If they report the loss early
enough, they will probably not be charged the fifty-dollar fee. Of course, it may be their bad
luck to attempt a charge through one of the so-called point-of-sale terminals. These are tied
into a central computer that updates customer's balances as transactions occur. These smart
"real-time" systems make things tougher for the credit card sharpie, as any such charge would
not be honored.
Protection of Your Credit Cards
To protect yourself, you need to compile the following information for
each credit card in your possession:
- Card name (American Express, Visa, MasterCard, etc.).
- Insuring organization (such as bank or other financial institution).
- Your account number. (This is usually the longest number on the card. There may also be a four-digit number
elsewhere on the face of the card; include this number, too).
- Telephone number for reporting lost or stolen cards. (The number may be displayed on the card).
- Street address for sending confirming telegram of card loss. (The operator responding to your telephone call
may advise you that this is an unnecessary expense; on the other hand, your copy of the confirming telegrams could
be worth a great deal of money. Should you decide not to confirm in writing, at least get the name of the person to
whom you made your loss report).
You will probably be issued a new card by your credit card company.
In many instances, you will find that you haven’t lost your card at all, but merely
misplaced it. In this event, you need only destroy the old one and begin using the new one.
You may be contacted by the security department of the issuer, particularly if a number of
bogus charges are made to your card. Of course, you should cooperate.
Finally, when you get your bill, it may include some bogus charges.
You should call these to the company’s attention, but at the same time pay only the charges you
legally owe. Federal law allows you to challenge charges for which you are not responsible, but will
not exempt you from paying your just debts.
If You Lose a Credit Card
Report the loss of a credit card as soon as you realize the loss has
occurred. Follow religiously the instructions you receive from the issuing firm. File a report with the police within
twenty-four hours of the loss or theft.
Credit Card User’s Responsibilities
You have probably been screened by the issuing company, and they have
determined that you are a responsible person. As a responsible person, you are morally, if not strictly legally,
required to do certain things. Examine all charge tickets before you sign them. In this way, you can prevent errors or
frauds before they become a fact. Retain your copies of billing sets and compare them with charges on your statements.
There is a time lag, and there may be a considerable passage of time from the charge until it finally appears on your
statement. Hang on to your billing copy until you pay it. Don't make the mistake of feeling that you have met all
your financial obligations merely because you have paid your statement in full. In this manner, you can protect
yourself from charges that appear on your statement but that aren't yours. Don't leave your credit cards lying around
the home, office, or especially, your auto. Don't carry your cards in your billfold along with your cash and driver’s
license. In this way, you won't risk losing everything at once.
An essential safety precaution is to destroy any unneeded duplicate cards.
You are liable for the first $50 of illegal charges made before you report the theft or loss of a card. Insurance
is available for reimbursing losses stemming from credit card theft or loss.
Services that will register all your credit cards are available. Should your
cards be stolen, you call a twenty-four-hour toll-free number, and the service will immediately notify all issuers of
your credit cards. All liability is ended as soon as you report the loss, including the $50 of illegal charges.
Related services — including emergency cash and prepaid airline tickets for a stranded traveler, requests for
replacement of stolen cards, and warning labels to affix to each credit card — are also available. There is no limit
on the number of credit cards covered by these services, so the more cards you carry, the more advantageous the
service is to you.