"So what," you may say--that's a problem for the banks and the merchants. Let them handle it. But you may not be so glib when you learn that those millions will eventually be replaced by--you guessed it--you and me.
It's true that if your credit card is lost or stolen, and the finder or the thief goes on a shopping spree at Neiman-Marcus, your immediate liability will be limited to $50. However, Kurt Watson, vice president of the Fourth National bank and Trust, Wichita, Kansas, and spokesman for the ABA, says, "Those costs are filtered back down to the customer through increased interest rates and increased costs in the goods and services the customers purchase."
Although nearly 95 percent of fraudulent transactions amount to less than $50, with 175 million credit cards in use and a total of some $68 billion a year spent via these plastic substitutes for money, credit-card holders, in toto, have much to lose.
"Actually, few crimes are easier to commit than credit-card fraud," says Mr. Watson. "It is a pervasive crime which, if not curbed, could surpass armed robbery or embezzlement in total losses."
Frauds are perpetrated in several ways. Cards are stolen. Lost cards are claimed as one's own. Carbons from sales slips discarded in the trash are picked up and an individual's credit-card number and signature are taken from them. Blank cards are stolen from the manufacturer or during shipment and are embossed for fraudulent use. The two major categories of fraud, however, are the use of altered cards (changing account-number, name or expiration date) and of counterfeit cards (facsimiles manufactured from raw material). About two-thirds of fraud dollar losses result from purchases made before the issuer realizes the card is being fraudulently used.
Well aware that the ultimate solution rests with them, the banks are now organizing to combat theft and counterfeiting. They have launched a nationwide program to alert card users to the problem. They are developing new (hologram--three-dimensional photograph) cards virtually impossible to reproduce. And they are developing equipment for merchants (department stores, service stations, restaurants, clothing and drug stores being most vulnerable) to quickly and accurately verify all credit card sales.
What can the merchants do? "Right now, the merchant has an antiquated little machine that he runs across the card," Mr. Watson says. "Then he makes a telephone call for verification if the amount of purchase is over the limit. Very soon, however, we'll have point-of-sales terminals with data-capture capability." This computer-based system will send all needed information to the clerk at the point of sale, he explains. In 15 seconds the clerk will know whether the card is stolen, whether it's over its limit and whether the sale can be verified.
As of now, however, the problem remains large, and the banks and merchants need help--specifically the cooperation of credit-card holders. Although Watson is quick to agree that the burden lies with the bankers, "it's in everybody's interest," he says, "to cut credit-card fraud as much as possible." Toward that end, the ABA has compiled the following list of dos and don'ts: dos
* Do exercise care in keeping your bank card. Remember it's a negotiable instrumen: In other words, it's worth money.
* Do report a lost or stolen card to the issuing bank immediately. The longer you delay, the more time the thief has to run up charges.
* Do make a list of your credit cards, their numbers, and the banks that issued them. Keep the list where it will be safe but easily available to you.
* Do open your credit-card bills immediately--even if you intend to pay the bill later. Review the charges to see that they were for purchases you made. If you find unauthorized charges on your monthly statement, promptly call your bank.
* Do watch carefully (where possible) as clerk fill in credit-card slips. Attentiveness may prevent a dishonest clerk from making two slips at the same time and submitting a second, phony charge later.
* Do retain, card receipts that carry your account number and keep them in a safe place. don'ts
* Don't carry credit cards you use infrequently. Keep them in a safe place.
* Don't give credit card numbers to "telephone survey" people claiming to work for credit-card companies or to any unkown caller.
* Don't treat your credit cards casually. They are worth money, so make sure they are returned promptly by clerks.
* Don't be fooled by "good Samaritan" callers who say the have found your cards and promise to mail them to you right away. This just gives thieves time to run up charges. Call your bank immediately.
* Don't ever lend your card to anyone.
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|Title Annotation:||credit card fraud|
|Publication:||Saturday Evening Post|
|Date:||Jul 1, 1984|
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