Fighting credit card crime starts with a clear understanding of the different types of charge-card fraud. Canadian-issued credit cards incurred about $400 million in fraud-related losses in 2008, according to Royal Canadian Mounted Police statistics. Fraud crimes fall into five major categories:
1. Counterfeited
cards ... $196.7 million (49.4 percent of total losses)
2. Internet
and telemarketing scams ... $128.4 million (32.2 percent)
3. Stolen
or lost cards ... $48.8 million (12.3 percent)
4. Intercepted
cards ... $13.2 million (3.3 percent)
5. Applicant
impersonations ... $11 million (2.8 percent)
1. Counterfeited cards. One of organized crimes' most lucrative stings is to replace legitimate card-processing terminals with fake "electronic skimming machines" at stores, restaurants and gas stations. Phony terminals capture private data from your card's magnetic strip plus the confidential PIN number you enter. Stolen data is copied onto laptops and downloaded onto counterfeited plastic cards, which are then used to rack up an average $610 in charges per cheated account.
Tip: Look for signs of tampering before using card-processing terminals.
2. Internet and telemarketing scams. Credit card deception over the Web or via telephone victimized over 210,000 accounts in 2008 -- almost a third more than the 158,503 accounts illegally accessed by counterfeited cards. In a recent online scam, warnings are texted to mobile devices advising consumers to review orders at legitimate-looking websites. To cancel the imaginary orders, those sites require credit card information. Popular telemarketing cons include instant-prize promotions and surveys that can only be validated with credit cards.
Tip: Only reveal card data to trusted parties in secure environments.
3. Stolen or lost cards. Stolen credit cards cost 47,546 accounts a total $32.3 million in 2008, compared to $16.5 million from 23,022 accounts for lost cards. Surprisingly, lost plastic resulted in a higher average loss of $717 per account compared to $679 for stolen cards. Credit cards are commonly stolen from fitness facilities, golf clubs, vehicles and workplaces. Cards are lost when busy shoppers rush through checkout lines or time-pressed diners leave their cards at restaurants.
Tip: Never leave credit cards lying around or lend them to anyone.
4. Intercepted cards. Back in 1992, mail theft accounted for 16 percent of total Canadian credit card losses. Since then, issuing companies have developed card-activation programs. By 2008, intercepted cards represented just 3.3 percent of losses. However, intercepting pilferers are greedy; they steal an average $3,042 per account -- the highest among all categories of Canadian credit-card fraud.
Tip: Secure your mailbox.
5. Applicant impersonations. Crimes in which fraudsters apply for credit cards under another person's name also cause a high average per-account loss of $3,038. Impersonators start by retrieving basic personal information from sources such as social networking websites, including Facebook and LinkedIn. Criminals then gather personal identification documents using the target's name. Applicant impersonation is among the most insidious crimes because unsuspecting victims only discover the thefts after their credit ratings are severely damaged.
Tip: To monitor suspicious charges, set up fraud alerts with credit bureaus like Equifax and TransUnion.
