Credit Card Fraud: Are We Fighting a Losing Battle?

Just how safe are we when using our credit card, whether it be online or in the fast-paced working world? Many of the new security measures put in place to keep us protected, such as PIN or chip numbers, may no longer be enough, as the British government has effectively decriminalized routine credit card fraud in the United Kingdom and the United States seeks to convict a former US secret service individual for the theft of 40 million credit identities.

In the US, the Secret Service handles crimes related to the U.S. money supply, including credit cards, with a limit of $150,000 before triggering an investigation. Criminals are able to stay below the radar by limiting transactions below $150,000. The FTC, or Federal Trade Commission, handles credit card fraud reports outside of local authorities. In the UK, a Fraud Act was introduced in 2006, covering deception involving online transactions, credit cards and checks, the law only came into effect on April 1. This means that victims of credit card fraud can no longer simply receive assistance from the police, but must instead seek aid from their card issuer in order to decide whether the case will be passed on to the authorities for investigation.

Many critics have questioned whether either system will actually work, suggesting that allowing criminals in the US to transact up to $150,000 before raising a red flag allows the criminals to get away. In the UK, it is the banks the responsibility for cataloging fraud figures and passing them to the police, together with any evidence they uncover, is just a way to artificially reduce crime statistics. There may be some truth in the matter, however, as the cost of credit card fraud is rising to uncontrollable levels.

Last year, card fraud cost the UK £610 million, approximately 43% in only two years, and most of these offenses involved telephone, internet or mail order shopping where chip-and-pin technology offers little to no protection. With counterfeit cards, the cost increased substantially to £170 million, while card identity theft rose by almost 40%, costing the United Kingdom £47.4 million. The only apparent decline in figures appears to be in the area of lost or stolen cards being used in stores since the introduction of chip-and-pin technology in 2006, with losses falling from £68 to £54 million.

Unfortunately, it would seem that fraud is slowly becoming the forgotten crime in Britain, with fewer than 400 police officers outside of London dedicated to fraud investigation by 2006. And the numbers only continue to decrease. Mike Bowron, Commissioner of the City of London Police, was reported as saying, "It is low priority because it is low visibility." More uncommon instances of fraud, those outside the area of credit card, check and online banking, will be dealt with by the police in the same manner as always, though.

In the U.S., very similar to other countries, credit card fraud has increased over 30% within the last year according to the FBI's Internet Crime Complaint Center's annual report. In 2008 there were 275,284 reports of internet crime while the year before there was 206,884 cases. The majority of internet crime reports in the U.S., including credit card fraud, accounts for 66% of worldwide complaints that were referred to authorities. After the U.S., the U.K. accounts for only 11% of internet crime reports.

In recent news, if you recall, a man was charged with the biggest US credit card fraud identity theft recorded. Ironically, the person caught was found to be a hacker who previously worked with the US secret service. Not only do the credit card thieves in the US have the knowledge to hack their way to a big payout, but sometimes are persons that had a legitimate job catching credit card thieves. Because the US has a large number of highly trained individuals who make it a living to track down thieves and credit card fraudsters, somewhere along the lines you find a bad apple. In the end, the man charged with the biggest US credit card fraud, Albert Gonzales, is awaiting trail for the different charges of stealing the credit identities of 40 million people around the world. This goes to show that credit card fraud, no matter the initiating source, is easily able to reach worldwide proportions.

Only time will tell, however, whether these new rules will help us in the fight against card fraud, and whether the police will finally receive the resources needed to catch these criminals and prosecute them to the full extent of the law.


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