Oct 13, 2008

Avoiding Credit Card Fraud: 8 Security Tips

"Someone stole all my credit cards, but I won't be reporting it. The thief spends less than my wife did."

-Henny Youngman

JOKES APART, there are various ways in which credit card frauds occur. Fraudulent use of credit card is not limited to the loss or theft of cards. The employees of the merchant establishment where you make the payment can misuse it; it can also be misused by your near and dear ones. Further, there is also a high level of risk involved in making online transactions.

While you can’t have the foolproof security, but by following certain guidelines/security measures, you can avoid such mis-happenings and if any such unfortunate event still occurs, you can at least minimize its impact.

Here is a list of few fraud prevention tips:

1) Erase the CVV number
Credit verification value (CVV) or card verification code (CVC) is a last 3 or 4 digit code usually printed on the reverse of the card at the end of the signature panel and is used for authorizing “card not present” (CNP) transactions occurring over the internet or over the phone. It’s a security measure to verify that the customer has card in possession while doing CNP transactions.

This CVV number should be kept confidential to prevent card misuse on the net. It needs to be erased because while making the payment you have to part with the card. In case, a cashier at any of the merchant establishments where you use your card gets hold of this number, he can easily misuse it without having the physical card in his possession.

But please make sure that either you memorize it or write it down and keep in a safe place before erasing it because if you forget/misplace this number, it cannot be regenerated like PIN and you will have to apply for a fresh card.

What I still don’t understand is that why don’t the credit card companies issue it separately like ATM PIN rather than printing it on the card itself which leaves the customers exposed to high levels of risk?

In my opinion, the verification purpose of CNP transactions should not be to ensure that the customer has card in his/her possession but rather to ensure that the person undertaking the CNP transactions is the rightful owner of the card and that purpose can be served by keeping the CVV number separate from the card instead of printing it on the card itself.

2) Sign on the back of the card
Sign your card as soon as you receive it.

As per the procedure, when you sign the charge slip, the merchant establishment has to match the signature on the charge slip with what you have signed on the back of the card.

In actual practice, this checking process is a rarity as most of the merchant establishment doesn’t bother to perform signature verification; therefore, relevance of signatures as a security measure is significantly reduced.

But why take chances? Signing at the back of the card doesn’t cost you anything. In case of any misuse, there are always high chances of getting hold of the thief, if the card is properly signed and the cash clerk/shopkeeper is vigilant.

Furthermore, after you sign the card on the back, keep a photocopy with you. It can help you in case of dispute because if your card is misused and the signature on the charge slip does not match with yours then the merchant should bear the liability.

3) Be extra cautious while making payments on the net
First, avoid using computers outside your home or office. Second, protect yourself against phishing scams where you are tricked by a fraudulent website to enter your card details. Before making an online transaction ensure that website is authentic and secure. Remember that a secure site should not be accessed from hyperlinks in a document or email; therefore, make sure that you always type the URL in the browser window.

You also have an option to keep a separate card for your online transactions. This card should have the small limit fixed according to your maximum usage requirement.

4) Keep the key information ready at hand
Keep a handy record of your card numbers, expiry date and helpline numbers to report a loss quickly. Compile a list of all such basic information and always carry it with you. But remember, not in your wallet because in case your wallet is stolen, you will also lose the list along with the credit cards. Moreover, keep the call centre helpline numbers in your mobile so that in case of loss you can immediately call the helpline and de-activate your card. The best option is to keep the card number also in your mobile.

Further, remember to keep a backup of such important information filed in a secure place.

5) Report the lost or stolen card immediately
The minute you lose your card, it becomes your responsibility to inform the credit card issuing bank/company. Therefore, in case your card is lost or stolen, immediately notify the credit card company because until the card company receives the notification of the card loss, they will continue to charge the purchases to your card, but once you notify, you won’t be liable for unauthorized use of your card. Some banks also require that you lodge an FIR and send them a written confirmation.

6) Review your statements
Retain all your charge slips, give a thorough look at your monthly statement and tally/reconcile all your charge slips against your statement. Immediately report any extra charges or any transaction which you don’t recognize to the credit card company.

7) Keep the Card limit at the lower levels
If your average monthly spend on credit card is, let’s say, about Rs 10,000 per month and your credit limit is, let’s say, Rs one lakh, then you may be unwittingly exposing yourself to unnecessary risks because in case of a misuse of your card, your risk exposure is equal to your card limit minus your current dues. So, try to keep your card limit at reasonable levels even if the card company is sanctioning you more.

8) Other Precautions
a) Keep a watchful eye on your card every time you use it for making payment and have it returned quickly.

b) Never respond to emails, phone enquiries or websites that request you to provide credit card information.

c) Notify your card company in advance in case of change in your address.

d) Don’t lend your card to anyone.

e) While traveling, carry only the credit cards you will require and put all others in a safe place.

f) Credit card PIN should be memorized. Never write it down.

g) Never carry all your cards in your wallet, in case you have more than one.

h) Destroy receipts, charge slips and any other documents which contains your card information instead of just throwing them away.

i) In addition to the hard copy of your monthly statement which you receive via courier, ensure that you also receive statement through email. Anyway, if your credit card bill doesn’t arrive in time, get suspicious and contact customer care.

To sum up, credit card usage has many risks; therefore, don’t take them for granted. Take adequate safeguards to avoid misuse of your credit cards. Furthermore, as it is impossible to completely protect your physical card/card information, be prepared in case your card/ information is stolen or misplaced.

Also Read-> Plastic Money: Be Wary of Hidden Traps

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