Outdated Technology Makes Credit Card Owners More Vulnerable
Credit card holders often become the main targets for identity thieves simply because they make for easy pickings. There are just so many ways for ID thieves to commit credit card fraud, and the fact that most victims are often unaware that they have been victimized until days or weeks later just helps to create an environment where crimes like this thrive.
It is also unfortunate for American credit card owners that the United States ranks first in credit card fraud among all other countries, according to a 2011 issue of The Nilson Report. The reports said that “the United States has a disproportionate percentage of the global total losses” for credit and debit card fraud, amounting to around 47% of all cases worldwide.
So why are American credit cards so susceptible?
The problem lies within the cards themselves and the technology that is used to make them. Credit cards in the U.S. carry a magnetic strip in the back, which in turn contains your account information. This has been the standard since the 1970s, and it hasn’t changed since then. These outmoded cards therefore make credit fraud by ID thieves a relatively-straightforward process, since the information on those magnetic stripes can easily be copied and used to make another card.
Most Americans are unaware that the credit cards they are using are based on obsolete standards; standards that have been discarded by other industrialized countries in favor of more secure “smart cards”.
In China, for example, the government has announced that magstripe cards will no longer be made nor accepted after 2015. Similarly, establishments in European countries have started adopting the EMV smart cards, with the European Central Bank recommending that usage of magstripe cards be abolished after 2012.
These “EMV smart cards” (for Europay, Mastercard, and Visa) utilize embedded computer chips instead of magnetic stripes to store personal financial information. When using an EMV card, the owner is usually also required to enter a PIN with each transaction. The multiple layers of security that is used for an EMV smart card makes it more secure than magstripe cards.
Credit Card Scams
Aside from the outmoded technology of American credit cards, we also have the criminal ingenuity of ID thieves and schemers to blame for the rise of credit card fraud. These people have developed several techniques and tools for just one purpose: to steal your credit information and use it to their own advantage.
The conventional identity theft for credit scam can branch out into several methods:
This is a type of “application fraud” that happens when somebody steals your personal information and uses that information to open a new credit account.
One of the most common and easiest credit scams ever. This happens when somebody uses stolen credit information to pay for products or services. This could be achieved either by using a lost/stolen credit card, or by skimming the information from the card and creating a duplicate.
This happens when somebody uses another person’s legitimate personal information to take over his or her credit account. He masquerades as the card owner and requests the bank to change the mailing address. He then reports the credit card as lost, and receives the replacement card for himself.
The scams mentioned above are just a few of the varied ways in which your credit information can be stolen and used against you. Identity thieves are constantly looking for new and better ways to achieve their purpose, including tools for copying and tampering with credit cards. Some of the more sophisticated fraudsters even have advanced tools to create counterfeit credit cards from scratch.
So what happens when you’ve been victimized?
Resolution for credit card holders who have been victimized by ID thieves/swindlers will be implemented as soon as you take action. If your credit card is lost or stolen, you should immediately report it to the card issuer, as well as the authorities. You should also follow up with another call or letter. Reporting your lost/stolen card will protect you from any unauthorized charges later on. A fraud affidavit will also be sent to you, which you should fill out as soon as possible and return to the card issuer.