Credit Card Fraud Warning

18th August 2010  

The world of organised credit card fraud suffered a crashing blow last week when Vladislav Horohorin was finally arrested in Nice. Horohorin, 27, a citizen of Ukraine and Israel, has been described by American officials as “one the worlds most prolific sellers of stolen credit card online data”. He was indicted in the USA in November 2009 on charges of access-device fraud and aggravated identity theft, but police and Interpol only caught up with him recently in the South of France.

Newspapers shout to us that credit card fraud is on the increase, but have you ever spoken to someone who’s actually really lost money due to a fraud on their credit card? The answer is probably not, but it’s costing us all more than you think.

There’s no question that as detection and conviction rates of traditional crimes have improved, petty criminals and organised crime have turned their attention to the rich pickings that can be had in the credit card environment.

But are the ordinary man or woman in the street really effected by credit card crime?

When the UK moved over to the EMV Chip and PIN system in February 2006 the credit card issuers took the opportunity to ‘spin’ the changeover as improved security for card holders, but of course this isn’t the full story. Chip & PIN has been the main factor behind a 66% drop in fraud at UK retail point of sale since 2004. This doesn’t mean that fraud has dropped in this time, merely that the focus has shifted with the implementation of Chip and PIN to internet and customer-not-present transactions.

Under UK banking law it should be the banks and card issuers who ultimately pick up the tab if someone fraudulently uses your credit card, and not the card holder. Hypothetically you’re liable for up to £50 if someone misuses your card, but quality banks and card issuers waive this charge in the interests of good PR on card security.

In reality however, it’s often the retailer who loses out. If someone fraudulently uses your card to try to obtain goods or services and the retailer fulfills the order, once the fraud is discovered their merchant services company will probably claw back the money involved in the transaction, even if they prove they took all reasonable steps to identify you and prevent fraud.

Of course in the end, any costs the card issuers can’t recover will come back round to the card holders by way of the charges on the cards and the prevailing interest rate, often over 20% when base rates languish at 0.5%.

Despite a unique specialist police unit, the Dedicated Cheque and Plastic Crime Unit (DCPCU) funded by the banking industry, credit card fraud remains a very serious problem that faces all of us. Plastic card fraud in 2008 was at a record level of £609.9 million in 2008, and when the figures for 2009 are released shortly they’re expected to show another all time high.

The latest scam is one we all need to be aware of. The swindle involves a call from someone who claims to be from telecoms provider BT urgently demanding payment for an outstanding bill. The credit card scammers ask for bank or credit card details and warn that if payment is not made immediately, the line will be suspended.

To convince bill-payers that they are actually calling from BT, the tricksters try to persuade their victim that they can temporarily disconnect the phone by not ending the call when the intended target hangs up, and pressing the ‘mute’ button their phone. When their victim tries to ring out again, there is no dial tone and the phone line is apparently dead. The fraudster then rings back a few minutes later to get the troubled member of the public to hand over their bank details.

A spokesperson for BT said that while it does sometimes call customers to chase payments, it never carries out disconnections during the call. They advised customers never give out bank or credit card details unless they know exactly who they are dealing with.

Ofcom, who also issued a warning yesterday about the rip-off, said that BT employees should be able to give customers an employee ID number and a freephone telephone number to call to check that any caller is genuinely from BT.

Consumers can check the identity or authenticity of BT employees or callers by calling free 0800 800 150.


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