Credit Cards Online Information

Despite increasing public awareness, credit card fraud is rising at a shocking rate. According to the Association of Payment Clearing Services (Apacs), it increased by 55 per cent last year.

Most of us would probably assume that the internet is to blame for the majority of fraudulent transactions. Mintel, the market researcher, reports that consumers are still concerned about online security. Over 80 per cent of people are reluctant to purchase financial products via the internet because of fears about disclosing credit card details.

But figures from Apacs show counterfeit cards to be the biggest problem. They cost the banking and retail industry pounds 102.8m in 2000 - a rise of 104 per cent on the previous year.

"We're not surprised by the increase," says Colin Grannell, managing director of Visa UK. "There's a huge amount of work to do [to combat credit card fraud], but even though we've known about the problems, making changes is hard."

The Apacs figures identified three main areas of concern: counterfeit cards, lost and stolen cards, and purchases made when the card is not present. These same issues are causing problems across Europe, but Mr Grannell says that Britain suffers more from credit card fraud than other countries. "The UK is a more mature market in terms of the number of people with credit cards. There are 63 million Visa cards in Britain and 177 million in Europe, so it's no surprise the problem is bigger here."

Measures to tackle the problem of fraud are in the pipeline with the first coming into effect next month. From April, a procedure known as SET (secure electronic transaction) will mean that when you use your credit card to pay for something over the phone, via the internet or using your WAP (wireless application protocol) phone, you will have to give more than just the card number and expiry date.

Customers must provide their address and the card verification value (CVV). The CVV is the extra three digits printed on the back of the card at the end of the number. These are not raised numbers, so they're not printed on receipts. This means you must have the card with you when you make a purchase.

In a bid to tackle the problem of counterfeit cards, chip cards are being introduced. The most common way cards are replicated is through a method known as "skimming". The fraudsters swipe the card through a machine, which downloads all the account details from the magnetic strip. These can then be used to make another card - and the cardholder is often unaware this has happened until the statement arrives.

This type of fraud is commonly associated with restaurants, where your card is often out of sight while your bill is being settled.

Chip cards will combat this problem. Rather than account details stored in the magnetic strip on the back of the card, they are put in a chip on the front. The information in the chip is much harder to copy than that on a magnetic strip.

Some card providers have started issuing cards with chips: both Visa and Mastercard are committed to this procedure. Visa EU has announced it will be investing 168m euros (pounds 107m) to accelerate the use of chip cards across Europe. Visa EU hopes the adoption of these cards will reduce fraud by 700m euros.

The problem of lost and stolen cards is harder for card issuers to tackle, although the UK banking and retail industry is discussing how it could be managed. Of the three main fraud problems, this is the only one where the cardholder can reduce the chances of a fraudulent transaction occurring. "People need to understand that this piece of plastic is valuable," Mr Grannell says.

Here are some ways you can protect your credit and debit card details:

n Don't throw receipts away or leave them around - fraudsters can get your card number.

n Always make sure you know where your card is.

n Check your credit card and bank statements. If you find a discrepancy, report it to the card issuer immediately.

# posted by Medical Information : 3:21 AM