Credit Card Fraud Reduction

Currently in Australia there are about 16 million debit cards and 11 million credit cards on issue. Thousands of transactions occur daily through the use of credit cards and a significant number of these are fraudulent. The retail industry sustained losses in excess of $12 million in 1998, which is estimated to be 20% of the real credit card fraud problem.

Types of credit card fraud

Credit card fraud can occur in a number of ways including:

• Lost or stolen cards, which are being used by another person illegally.
• Never Received Issue, which are cards stolen while in transit and used by another person illegally.
• Fraudulent applications, which include cards issued on the basis of counterfeit or fraudulent documents.
• Identity takeover, where people use ‘real names’, not their own, to gain a card fraudulently.
• Card generator programs used to generate credit card numbers that appears to be legitimate cards.
• Multiple imprints (either electronically or manually) of the cardholder’s cards at the time of payment.
• Mail order, telephone order or Internet use of legitimate or fraudulent card details for the delivery of goods.
• Skimming or copying of electronic data contained on the magnetic stripe on the rear of a legitimate card and used to re-debit the cardholder’s account at a later date or to encode a stolen or counterfeit card.

Counterfeit plastic cards can be created fraudulently by:

• manufacturing a complete card and embossing and encoding stolen details
• embossed only cards used at collusive merchants for manual transactions
• encoded only white plastic for use through EFTPOS terminals (telephone, petrol pumps) or with collusive merchants (PIN input is required at some sites)
• re-encoded or re-embossed genuine credit cards that have been obtained by theft, lost etc.
  

Hints and tips to reduce fraud

Some hints and tips to help reduce fraud against you and your customers:

• Switch off your EFTPOS machine at night.
• Check card signatures.
• Check that the card numbers on the front and back of the card match.
• Make sure holograms are clearly visible.
• Check for valid expiration date.
• Ask for further identification if unsure.
• Check for ghosting or shading used to cover-up changed numbers.
  

Identifying fraudulent credit cards

Credit cards are made with identifying features designed to reduce the possibility of fraudulent cards being used. Business owners should familiarise themselves with these features to reduce the risk of fraud. These features are explained in the document Identifying Fraudulent Credit Cards (PDF, 3, 165KB).