“Your credit card has been declined.” The waiter whispers these words into your ear and you get that sinking feeling in the pit of your stomach, especially when you are entertaining a client or trying to impress a new love in your life.
When you call the bank to ask what’s up. You know you have paid your bill on time. They tell you that your credit card has been compromised. They never tell you that you have been a victim of credit card fraud. But that’s what it is, and you feel violated. Somebody has infringed on a most intimate secret and it doesn’t feel good.
Three times it has happened to me.
The first time, before the advent of the secure personal identification number (PIN), a store clerk simply used the number on my receipt to make his or her own purchases.
The next time it was not so straightforward. I was working in the head office of one of the major banks. A gang of con artists had spoofed a credit card reading machine in the well-used underground shopping mall and counterfeited the credit card numbers and PINs from the crowds who bought lunch or coffee. The fraudster never got into my account, but the banks quietly asked the thousands who had swiped their credit cards there to change their PIN numbers.
The third time I was using a corporate credit card. I got a phone call from the credit card issuer asking if I had bought anything in Albuquerque, New Mexico. I had never been there, nor did I know Walter White or Breaking Bad, and my card had never been out of my possession. But I might have shopped at Home Depot. In one of the biggest retail-credit-card breach on record, hackers got into Home Depot’s systems by stealing a password and 56 million credit card accounts were compromised. It could have been at Target, Nieman Marcus or Winners, just a few of the other major retailers who had their credit cards records hacked.
If you think I was just three times unlucky, consider that the Chartered Professional Accountants of Canada conducted a national survey that found that almost a third (29%) of the respondents report being victims of some form of financial fraud and 43% know someone who has been a fraud victim.
The major credit card issuers like Visa, MasterCard and American Express have zero liability policies for unauthorized transactions. So if you report the fraud right away and you haven’t done anything any silly to generate it, you’re covered. Their customers are not responsible for fraudulent transactions made on their cards.
The banks and credit card issuers all offer advice on how to protect yourself from credit card fraud. There are lots of other resources online with tips. The Canadian Bankers Association and Royal Canadian Mounted Police offer two of the most comprehensive sources.
I’ll leave you with these tips:
- Report a lost or stolen card as soon as you notice it is gone.
- Never lend your card or disclose your PIN or password to anybody.
- Don’t use your birthdate or address when choosing a PIN, or any other number that could not be easily detected or guessed. 1234 is not a secure password.
- Make it a habit to regularly check the transactions on your monthly statement.
- Never give out your card number over the phone or Internet unless you know who you are dealing with. Scammers will try to trick people into revealing information about their credit cards either over the phone or through e-mail.
- Evaluate websites before entering credit card data. People who commit credit fraud use the Internet to their advantage by stealing credit card information from unsecure websites as well as fake sites.
- When shopping online, be sure the page you’re on a site that says has “https” on the address line, which indicates it’s secure. You should also examine the site for proof of authentication services. For example, VeriSign is a trusted company that secures the information entered in the purchase screens for online retailers. If the site lacks a security policy, doesn’t bear the seal of a trusted authentication service provider or phone number, it’s possible that your credit card information will be exposed to hackers.
- Keep one credit card strictly for online purchases. It can help protect your identity by limiting the potential exposure of your personal information. By having all your online transactions on one billing statement, it’s easier to recognize fraudulent activity and quickly put a stop to it.
Credit card scammers are becoming more sophisticated all the time, and more wide-ranging. In fact, most recently, information from the American Internal Revenue Service was hacked. But even against the high-tech practices, these simple tips are your first line of defense.