Credit Card Fraud & How to Avoid Credit Card ID Fraud

I.D. theft via credit card fraud has become the single biggest headache for every user of the internet shopper. Just last month, my friend who is a Doctor had her identity stolen and one bank account cleaned out!

All this from a fake phone call from her *supposed* credit card company. She was busy, not thinking until she hung up that it seemed *odd* - and that, in hindsite, she shouldn't have answered the questions asked.

The Obvious thing is this - NEVER EVER GIVE ANYONE information about you or your finances, SSN, or DOB, address etc... OVER THE PHONE EVER.

Here is how the basic scam works; there are various deveations of course but the theives need certain information from you so some things they will ask won't change much.

Phone rings, you answer, scammer says something like:

"Good morning, I am from Visa One and am checking into a recent transaction on your credit card. Can you verify the last 4 digits of your SSN for me please?"

Example: - it really does catch a LOT of people off guard and they do tell the caller. They don't have ANY idea that it is SUPER easy to obtain ANYONES first 5 SSN digits!! The last four are much harder to obtain!!

If you answer that question; they know they have hit pay-dirt and continue on until they are either done stealing your identity or you have twigged and hang up. It is always one or the other - this is the deciding factor - right then.

When you use your credit card online, make SURE the site you use is highly encrypted; if your security warning comes up - don't use that site. All reputable websites use this encryption; there is NO reason not to! These sites also reguire the last 3 digits on the back of your card; obviously if someone does not have the card in their hands, chances are they could never know what those 3 digits are...unless you TELL THEM. This is a very good auto-I.D. thieft provention measure.

I had to keep bugging my own merchant account provider to put it in place once this technology was implemented.

Also - this is VERY IMPORTANT - unknown to so many people are these 3 FACTS about credit cards and disputing a charge. Because the credit cardagencies and the law have not caught up to the internet these days (and it applies to phoning in orders as well) - there are 3 things BY LAW that MUST BE PRESENT for a charge to your credit card to be held up as valid and purchased BY YOU. Old school rules are still the LAW.

#1 - Your signature MUST be on the original purchase receipt!!

Now we all know that can't happen with phoning in a purchase or with purchasing anything online; so right there you have every right to make a charge back! Credit card companies do NOT obviously want you to know this!!

#2 - The cashier MUST look at the back of the card and your signature to see if they feel they match; if they doubt they match, they muct ask you for supporting I.D. to confirm you are the owner of the credit card presented!

(One the phone or internet the card cannot even be swipped

#3 - THE BIG ONE - YOU, yes, YOU must be PRESENT during the transaction! It is actually laughable isn't it!? This is actually #1 on the list!

Rule1: Every sale requires both an authorization and a deposit.

Rule 2: Always note the Authorization Code.

An Authorization Code indicates that the cardholder has the credit to pay for the purchase. This assures you of payment, as long as

• A valid card was used by the authorized cardholder.
• The cardholder (not someone else) has signed a sales draft.
• The signature on the sales draft was matched against the signature on the back of the card.
• You have proof that the card was present ( a receipt created by your printer as the result of a magnetic stripe read, or an imprint of the card created by your imprinter). You won't have this for mail-order, telephone-order, etc., increasing the risk.
• The transaction is not disputed later by the cardholder. (If this happens, you'll have to fight for your money through the chargeback process.)

Now...there are those who will dispute this; however, nevertheless, it is true. I am sure the laws will catch up eventually - but right now - still in 2008 - they have not.

For the merchant this is really a raw deal as the below from the FTC can never apply:

Make sure that the credit card is from the legitimate cardholder... not just someone who knows the card number, or has stolen the actual card Verify signatures (face-to-face transactions) on the card and on the receipt signed by the customer Take special care with non-magnetic transactions like telephone orders, mail orders or Internet orders. If applicable, use the Address Verification System and verify the Security Codes (also known as "Validation Codes") on the card (this prevents many pass-through fees). Obtain a signed receipt from the cardholder and, if applicable, a signed proof of delivery from the shipper for delivered goods. Protect your merchant ID and terminal ID so no one submits transactions without your permission.

So - the risk is not only for YOU but for the merchant as well. MANY people buy something online and get it; then turn around - write their credit card company and tell them -->

A) - They never Ordered the goods or service to begin with (Prove I did!)

B) They never Received the goods or service (NO shipment tracking and especially difficult with a service)

So...as you can see - this is a really big mess and not one that will be getting cleaned up anytime soon - if ever.

How ID thieves CAN and DO use your private information:

· Thieves open all sorts of new types of accounts in your name. Using your credit (as in ruining your credit rating) is the number one mess. This is so easy to do with all your information! They will use your Social Security number (if they have it but that isn't even necessary!), your name, your DOB - date of birth, your current address. This is particularly bad if your shipping address is different from your credit card address! Charges are then racked up to "your accounts" only they are not really you. The tough part comes in when you have to prove it was NOT you!

· They shuffle your information around with the credit bureaus. There are the 3 main major ones and many subsidiaries. They will phone them, claiming to be you asking that your credit report be sent to a new address. At this point; they can then start all over again!

· They will open accounts in your name at various utility companies; heat, water, etc... and then perhaps a cell phone service or Internet account. Usually doing all of this does not cost them anything but if it does, they simply use your card to *charge it*. They may even open up a bank account or two; start writing out the checks the bank provides until "yours" come in the mail.

· They have probably applied for a driver licence, in your name, so they won’t have any trouble cashing the checks they write. If a drivers licence takes too long to come; there are many other forms of I.D. available nearly immediately. Public records are easy; such as your birth certificate.

· Taking out a home loan and/or car loan in your name are big ticket items. Most Identity thieves won't usually go this far or GET this far without being caught on to, but a great deal of this really depends on the order in which they do these things.

· If they want to avoid any *bad debts*, they can even file bankruptcy in your name. Now how are you EVER going to get YOUR life back?

And just look at the list below of items for sale on Ebay!! How Scary is that!?

Don't think it *can* happen to you, aye? Ya, just like you didn't think you could get pregnant! ;}