Credit Card Security

By 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.