Criminals are realising that credit-card fraud is a lot easier than robbing a bank.
Fraud specialist John McVitie said:”The armed robbers of yesterday are finding it much more attractive to commit credit-card fraud today. This is for two reasons. They are likely to get away with more money and if they get caught they are likely to get away with a lighter sentence. There is more benefit and less risk.”
Government figures show that while reported crimes were down by 1.4% to a total of 5.1m incidents in the year ending April 1999, credit card and cheque fraud cases leapt by 30% to 142,500. The most common crimes – theft, burglary and criminal damage – were all down.
The bank and credit-card industry estimates that the amount lost on telephone, mail order and Internet frauds involving UK-issued credit cards rose by 36% to £13.6m in 1998. The figure dipped to £2m in 1994, but has risen every year since.
Travel agents and computer companies are currently both prime targets for credit-card fraudsters.
Agents are being stung for amounts ranging from £500 to £20,000 in ‘cardholder not present’ frauds – in other words, when a sale is made over the phone. If a credit card is not present and the sale subsequently turns out to be fraudulent, retailers are hit with a full charge-back by the bank or credit-card company involved.
One of the problems is that half of travel agents think it couldn’t possibly happen to them, while the other half are reluctant to report it to the police or ABTA after it has happened.
ABTA head of financial services Mike Monk said that as a result of this reluctance, it is extremely difficult to calculate just how many agents have been hit.
He claimed that at three regional ABTA seminars on credit-card fraud earlier this year, a show of hands had revealed that at least half the agents at each event had been victims. The general tendency not to report incidents is causing problems for the industry.
“It’s a big issue that these incidents are not being reported to us or the police,” said Monk. “They don’t get into the crime statistics so resources are not allocated to policing the problem. It’s also helpful to other agents to report these frauds, so we can warn them. Fraudsters do tend to target particular areas at a time. One day it could be you.”
Meanwhile, Monk is tackling a related area of concern for agents. Banks are starting to refuse to carry out Code 10 authorisations and are beginning to charge for the service.
Code 10 authorisations allow agents who are suspicious about a transaction to check whether a card has been stolen and whether the cardholder has exceeded their limit.
Although this does not protect an agent against a charge-back if the transaction later proves fraudulent, the check does offer some peace of mind.
Monk has contacted the Association For Payment Clearing Services, a trade body for banks and credit-card companies, to seek a meeting about the issue.
An APACS spokesman said the matter was one for its individual members. However, he stressed that new measures were being introduced to help retailers combat fraud.
New numbers are being added to the signature panel on the back of credit cards, as an extra safeguard. Also, an address verification system is being developed and will go live in the next two years.
ABTA has put together a six-page leaflet for agents on how to prevent credit-card fraud. It should be published by Christmas. Information can also be found on the ABTA Web site at www.abtanet.com.
If you have been the victim of credit-card fraud, contact Monk on 020-7307 1928.
ABTA head of financial services Mike Monk outlines a typical credit-card fraud scenario
Travel agent X receives a call from a customer using a mobile telephone, who wants to buy a high-value airline ticket for travel within the next few days. The request is quite often for a first-class ticket to New York or a west African city.
The customer claims he is too busy to come into the agency, and wants to pick up the ticket at the airport or have it delivered. Travel agent X then carries out the credit-card authorisation process without any obvious hitch.
The person who actually uses the airline ticket is likely to be a third party who has been sold it by the fraudster. Travel agent X is notified around eight weeks later that he has been hit by a charge-back for the ticket.
Credit-card fraud specialist John McVitie provides some advice on how to detect a fraudster over the telephone:
He is using a mobile telephone.
He seems uncertain about the information he is giving.
He has to keep referring to someone else to answer your questions.
He doesn’t know what bank issued the card.
He doesn’t know the number on the signature panel on the back of the card.