Counterfeiting and Credit Card Fraud

Overview

At the end of fiscal year 2007, approximately 64.1 million credit cards were in circulation across the country, with a retail sales volume exceeding $240.5 billion (MasterCard and Visa).

Payment card counterfeiters are now using the latest computer devices (embossers, encoders, and decoders often supported by computers) to read, modify, and implant magnetic stripe information on counterfeit payment cards.

Phoney identification has been used to obtain government assistance, personal loans, unemployment insurance benefits and for other schemes victimizing governments, individuals, and corporate bodies.

Top of Page

Categories of Credit Card Fraud

The criminal use of credit cards can be divided into the following categories:

• Counterfeit credit card use: This represents the largest category of credit card fraud, involving Canadian issued cards, with 49% of all dollar losses. Organized criminals have acquired the technology that allows them to "skim" the data contained on magnetic stripes, manufacture phony cards, and overcome such protective features as holograms.
• Cards lost by or stolen from the cardholder: Lost and stolen cards represent 12% of all card fraud losses. Typically the cards are stolen from the workplace, vehicles, health clubs, golf clubs, etc.
• Fraud committed without the actual use of a card (no-card fraud): No-Card Fraud accounts for 31% of the all losses. Deceptive Telemarketers and now fraudulent Internet Web Sites obtain specific card details from their victims, while promoting the sale of exaggerated or non-existent goods and services. This in turn results in fraudulent charges against victims' accounts.
• Fraud committed on cards not received by the legitimate cardholder (non-receipt fraud): Non-Receipt Fraud where cards are intercepted prior to delivery to the cardholder account for 3% of all losses. Losses attributable to mail theft have declined as a result of "card activation" programs, where cardholders must call their financial institution to confirm their identity before the card is activated. In 1992 this category accounted for 16 % of the losses.
• Cards fraudulently obtained by criminals who have made false applications: Fraudulent Applications involve the criminal impersonation of creditworthy persons in order to acquire credit cards. Although false application losses represent only 3% of all losses, the numbers are increasing.

Top of Page

Tips

Follow these tips to protect your money and your credit and bank cards against fraud and misuse. Your ABM/debit card is the key to your account(s). It is for your personal use only.

• Keep your card in a safe place and never 'lend' it to anyone. Conducting an ABM or debit transaction requires both your access card and your Personal Identification Number (PIN).
• Protect your PIN, it is your electronic signature. Don't write it down - memorize it.
• When selecting a PIN, always avoid the obvious - your name, telephone number, date of birth, and address.
• Never disclose your PIN to anyone. No one from a legitimate financial institution, police service, or business should ask for your PIN.
• Always conduct your ABM transactions when and where you feel most secure. If you are uncomfortable about using the machine for any reason, do it later or go to another location.
• To ensure privacy, use your hand or body as a shield to prevent others from seeing you enter your PIN.
• After completing a transaction, remember to take your card and your transaction record.
• After making a withdrawal from an ABM, count the cash received and put it away immediately.
• If your card is lost, stolen, or is retained by an ABM, notify your financial institution immediately. Most institutions offer 1-800 telephone numbers and/or 24-hour service for lost or stolen cards.
• Robbery rarely occurs at ABMs, but if it does happen, remember that your safety comes first: Cooperate with the robber and then report the incident to the police and your bank.

Source: Safe Guarding Your Money Canadian Bankers Association (October 2000)

Links

• Internet Crime Complaint Center Federal Bureau of Investigation and National White Collar Crime Center
• Please visit the
  Canadian Consumer Information Gateway