Here we unravel some myths and reveal some facts about the 'plastic fantastic'. How secure are your card details? Can someone else use your card? Why cant we just make up some number when we buy on the Internet or over the phone? These questions answered, and more.

There are literally thousands of different credit cards out there. Along with the major players, namely Visa, MasterCard, Amex and Diners are many other big-money names. Large stores like Bloomingdales and Harrods have their own cards. Smaller banks, building societies and other financial institutions have their own brand of cards. For security, some have built in secret protection. Some rely on the improbability of someone guessing numbers correctly. But in reality, credit cards are a major crime problem world-wide. It is believed there is more credit card fraud than any other type of fraud. Credit card companies try to keep this kind of information under their hats as this would just encourage more criminals to use this form of making a living. In this day and age, electronic point-of-sale (POS) technology has reduced the amount of money lost due to credit card fraud. In the early days of 'zip-zap' machines (some are still used today) it was soon discovered that by simply finding the discarded carbon copy from credit card transactions a criminal was well on his way to making easy money. Everything the criminal needed was recorded on the carbon. Name, card number and expiration date is all anyone needs to purchase anything by credit card. A scenario could be this:

The criminal calls and books air tickets at a busy airline, using the stolen credit card details and an alias. He, or an accomplice picks them up and then on sells them on the black market for cash.

Often, credit card crime is not detected for many weeks, at least until the legal card holder gets their statement and discovers extra purchases against their card. This lead time is a major advantage to the credit card fraudster. Most companies bill their clients the same time every month. A savvy con will start the week after the bill was sent out and stop just before the next one is sent. Then they simply change to another number and repeat the process. It is not unknown for criminals to live on this income for years and not be caught. We know of one person who came back from an Asian country to a find a huge bill waiting. It turns out the storekeeper at a department store put two credit card slips into the 'zip-zap' machine and then the unsuspecting customer signed both at once. This resulted in a double billing of a substantial amount. (The credit company involved successfully prosecuted the offending store owner). Remember, everyone who handles your card, be it a waiter, store owner, or gas station attendant knows your card number, your name, and the expiration date. This, as we have seen, is all a dishonest person requires to start buying goods with your money. It wasn't long before card companies took carbon paper out of their payment slips. The problem was significantly reduced, but the present slips still provide all the details criminals need and if stores are not careful about where their garbage ends up a lot of these details can fall into the wrong hands.

What about making up a number? Will that work? Unfortunately for criminals, no. Take Mastercard. They have 20 numbers (including spaces). This means that there are a potential one hundred quintillion numbers. Yes that is 100,000,000,000,000,000,000. As there are estimated to be around 120 million MasterCard customers world-wide, the chances of a random string of numbers matching a valid card number are around one in a trillion. Unless a criminal was very lucky it is almost a certainty they wouldn't pick a valid number. This is why copying a valid number from an existing card is the only sure way of obtaining one.

Another means of security is the signature panel. On many cards this is a coated area where the holders signature is displayed. This too is a potential security issue. Often the coating is no more than a thin film of what appears to be paint or plastic. This is easily removed using standard methylated spirit or nail polish remover (acetone). Once removed, it is relatively easy to mask the rest of the card off with painters masking tape and reapply a passable facsimile of the coating. Then all is needed is for the criminal to sign their own name to the card and go shopping. This hazard is reduced on some cards by the use of a detailed signature panel utilising the same anti-counterfeiting technology as printed money. This makes erasing and resigning a difficult task, and only the serious criminal will contemplate using this method. More often than not these days store clerks pay little or no heed to the signature anyway, so it is debatable as to whether it is worth going to all this trouble. Yet another scam is to remove the signature itself from the panel, simply by erasing it with a pencil eraser, and replacing it with another. This practice has been all but wiped out by the fact that modern cards panels are easily destroyed by any attempt to remove or modify the signature, and some even display the word 'VOID' underneath thus announcing the attempt at deception. Then there is the magnetic strip. Ever wondered what was on that? From a technical point of view, not much, as there just isn't the room to store a lot of data on it. The strip is essentially a piece of magnetic tape, just like an audio or video tape. Some organisations have accused banks and governments of putting many personal details on credit cards and debit cards, presumably to track our movements in some 'big brother' like conspiracy theory. The fact is, though we don't know exactly what is on the strip, we can pretty much tell you what isn't There is simply not enough storage capacity for anything but the barest of details. Critics claim that an individuals name, address, social security number, employer, credit limit, inside leg measurement and similar details are listed, but we consider this very unlikely. If this was the case then a new card would need to be issued if you changed your address or your job. More likely the strip contains the account number and expiration date of the card, and nothing more. Since an ATM (automatic teller machine) knows when a card has passed it's expiration date, (and eats our card) before we enter any details, we can assume that this information is on the magnetic strip. Any other details can be called from the banks central computer database. It is also highly unlikely the PIN (Personal Identification Number) is stored on the strip. Anyone with a card reader (which seem to be available to anyone these days) could then steal a card, read the PIN and head off to the mall. Most likely the PIN is called from the bank computer as well. It is also known that most ATM's have a 'three attempt' limit, after which it assumes you are a bad guy and eats your card, so it pays to get your PIN right the first time.

Added Feb 2002:

Want to annoy the heck out of your credit card company? All you have to do is pay off your card in full every month. Credit companies hate this! They call people who do that 'freeloaders'. They want you to run it at the limit all the time. That way they can suck the interest out of us at an alarming rate. This is how they make their money. If every card holder paid on time the company would go out of business. Using your card for every purchase, no matter how small, then paying the balance at the end of the month is also the best way of managing your personal finances. EFTPOS, ATM or debit cards normally cost the user about 20 to 50 cents per transaction, so if you use the card for your day to day spending (which is what the banks want you to do) then the monthly charges would be huge. Use it twice a day at, say, 30 cents per transaction and you get stung for $18.00 at the end of the month! This is just pure gravy for the banks. Online (Internet) facilities often cost even more so we have to be extremely careful not to waste our hard earned cash. The way to do this is use your credit card. Not only do most major cards have a zero transaction fee (saving us our monthly 'bank' charges), but you also have a maximum of 55 days interest free credit! Better the money in your account gaining interest than in theirs! As long as you pay that bill in full each month you will never pay for owning a credit card (aside from any fee the bank may charge you per year to have it; this is also negotiable, so ask your bank).

That's it for this section. If you have any information you would like to share then submit it here.

Disclaimer: The SYSK Team do not condone fraud or illegal activity of any kind.
This information is for general interest only.

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