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Thread: Credit Card fraud....

  1. #1
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    Credit Card fraud....

    Our daughter works in the accounting department's revenue division for one of the major airlines. She has to deal daily with credit card fraud as it pertains to that business where she interfaces between the company and the issuing banks.

    In conversation this morning she told me how the two major credit card fraud schemes are worked on the airlines and how much it costs the company as in the end, often the company has to take the financial hit.

    Last month credit card fraud cost her employer 1.8 Million dollars. That was just last month.

    I found it staggering!
    Last edited by Ken Fitzgerald; 08-25-2016 at 1:49 PM.
    Ken

    So much to learn, so little time.....

  2. #2
    I wonder if the new chip cards will help reduce the amount of fraud. It should make if harder to clone a card - providing the merchant has a reader that reads the chip.

    Mike
    Go into the world and do well. But more importantly, go into the world and do good.

  3. #3
    Credit card theft/fraud will only continue to get worse until the banks start to actually do something about it. I'm sure you've all seen the marketing hype from credit card companies that boast about how they have your back when your credit card info is stolen and how you won't be held liable for the money. Well they don't lose any money either when that happens. It's all on the backs of the merchants and the merchants have no recourse.

  4. #4
    Quote Originally Posted by Ken Fitzgerald View Post
    .. as in the end, often the company has to take the financial hit.
    Quote Originally Posted by Aaron Conway View Post
    ... It's all on the backs of the merchants and the merchants have no recourse.
    I would argue it's ultimately on the consumer's back. The banks push the cost of fraud to the merchant, the merchant to the consumer disguised as inflation. - - Perhaps in rare cases, competitive pressures mean the stockholders/owner get the hit.

    And chip card didn't save me from fraudulent charges 6 states away - - to an airline. (2nd time in last 6 months to cancel all the cards and start new. No idea of the cost to bank, but cost me 2-3 hours/ea.)

    I have not heard a good solution put forward by anyone, but guessing that something has to change soon.

  5. #5
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    I won't go into detail how the credit card scam is worked as it would only give others ideas. The manner the scam uses will work one time only for a given card. It does it in such a way that the only prevention would be if the bank called the card holder and verified every purchase.

    The idea that one company gets this amount of fraud only made me wonder how much the entire US economy is affected by credit card fraud.
    Ken

    So much to learn, so little time.....

  6. #6
    Quote Originally Posted by Malcolm McLeod View Post
    I would argue it's ultimately on the consumer's back. The banks push the cost of fraud to the merchant, the merchant to the consumer disguised as inflation. - - Perhaps in rare cases, competitive pressures mean the stockholders/owner get the hit.
    Yes, ultimately the consumer will pay for it with increased prices at the store but most consumers aren't smart enough to see it that way. Kind of like, if you gave every person a quarterly tax bill for all the taxes they owe, versus "pay as you go" there would be riots like we've never seen.

    If I'm a merchant and I sell a $1000 tool and the credit card used is fraudulent the bank will automatically take the money out of the merchant's bank account without explanation. The explanation usually comes several days later. The merchant then loses the $1000 and the merchandise and it's not like the merchant gets that money back from other customers with increased pricing the next week.

    When I had a store with a robust e-commerce business I would do address verification, CVV verification, ip address location checking and I would still occasionally get taken. Glad to be out of that now.

  7. #7
    Quote Originally Posted by Ken Fitzgerald View Post
    I won't go into detail how the credit card scam is worked as it would only give others ideas.
    Trust me, they already know how to do it a dozen different ways.

  8. #8
    Quote Originally Posted by Aaron Conway View Post
    It's all on the backs of the merchants and the merchants have no recourse.
    I don't believe that's true. Under the present set of rules, if the merchant has a chip enabled terminal and the chip is used for the transaction, the merchant does not eat the transaction. If the merchant does not have a chip enabled terminal and the charge is done through a card swipe, the merchant eats the transaction. Here's an article about it.

    Under Federal law, the consumer can only be charged for $50 of a fraudulent transaction, and since that's so small, the card companies don't charge it back to the consumer. If the charge is made via phone or Internet and the card is not present, the consumer is not liable for any of the transaction cost. In other words, if all they stole was your card number, you're off the hook.

    Mike

    [BTW, fraud is much less in Europe because they use a chip card and PIN. Here in the US, the card companies decided not to use a PIN because they were afraid people would not be able to remember the PIN, and would therefore use another card, perhaps with a PIN they could remember. The chip plus PIN is very secure when making a charge with the card present. Even if someone stole your card, they could not make a purchase without knowing the PIN. Of course, the scammers would then just go to online purchases where the card is not present.]
    Last edited by Mike Henderson; 08-25-2016 at 2:27 PM.
    Go into the world and do well. But more importantly, go into the world and do good.

  9. #9
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    Quote Originally Posted by Mike Henderson View Post
    I wonder if the new chip cards will help reduce the amount of fraud. It should make if harder to clone a card - providing the merchant has a reader that reads the chip.
    It will help, but not really go far enough until we go to "CHIP and PIN" like the rest of the world. The silly banks didn't think that US customer could remember a PIN... go figure!
    --

    The most expensive tool is the one you buy "cheaply" and often...

  10. #10
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    Quote Originally Posted by Jim Becker View Post
    It will help, but not really go far enough until we go to "CHIP and PIN" like the rest of the world. The silly banks didn't think that US customer could remember a PIN... go figure!
    Jim,

    Someone asked my phone number the other day.....and it didn't pop into my head. They may be right. I had a PIN on a bank card for years and one day forgot it, just out of the blue.

  11. #11
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    I just write the pin number on the card so it is easy to find.

    Wood: a fickle medium....

    Did you know SMC is user supported? Please help.

  12. #12
    Quote Originally Posted by Mike Henderson View Post
    I don't believe that's true. Under the present set of rules, if the merchant has a chip enabled terminal and the chip is used for the transaction, the merchant does not eat the transaction. If the merchant does not have a chip enabled terminal and the charge is done through a card swipe, the merchant eats the transaction. Here's an article about it.

    Under Federal law, the consumer can only be charged for $50 of a fraudulent transaction, and since that's so small, the card companies don't charge it back to the consumer. If the charge is made via phone or Internet and the card is not present, the consumer is not liable for any of the transaction cost. In other words, if all they stole was your card number, you're off the hook.

    Mike

    [BTW, fraud is much less in Europe because they use a chip card and PIN. Here in the US, the card companies decided not to use a PIN because they were afraid people would not be able to remember the PIN, and would therefore use another card, perhaps with a PIN they could remember. The chip plus PIN is very secure when making a charge with the card present. Even if someone stole your card, they could not make a purchase without knowing the PIN. Of course, the scammers would then just go to online purchases where the card is not present.]
    my mastercard from ufcu is chip and pin

  13. #13
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    We were notified this week that the regional bank with which we deal is sending us new debit cards with chips and we use the same pin we use currently on their debit card. We are hoping they arrive before our upcoming trip as we use them in ATMs abroad where we often get the best exchange rate.
    Last edited by Ken Fitzgerald; 08-25-2016 at 7:32 PM.
    Ken

    So much to learn, so little time.....

  14. #14
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    Twice since I have been a Sam's Club member, I have stood in line for 30 minutes or so while some fool in front of me with two or three carts of stuff desperately seeks to remember her PIN or call someone else to find out what it is. In addition to that, each time the clerk would not ask the customer to get out of the way so someone else could check out. I can imagine if all card holders were required to use a PIN, this same scenario would play out many times a day at retail establishments.

    Quote Originally Posted by Jim Becker View Post
    The silly banks didn't think that US customer could remember a PIN... go figure!

  15. #15
    Quote Originally Posted by Ken Fitzgerald View Post
    We were notified this week that the regional bank with which we deal is sending us new debit cards with chips and we use the same pin we use currently on their debit card. We are hoping they arrive before our upcoming trip as we use them in ATMs abroad where we often get the best exchange rate.
    For travel overseas, there's a couple of things to watch for.

    1. Get a credit card which does not charge a foreign exchange fee. Some cards charge as much as 3% for a charge in a non-US currency.

    2. The cheapest way to get foreign currency (cash money) is to use your bank ATM card. Some banks do not charge a fee when you use your ATM card in a foreign country. Check with your bank. If they don't charge a fee, you'll get the best exchange rate possible. The worse (well, one of the worse) is to change your US dollars in the airport.

    Finally, a couple of cards offer trip cancellation insurance as long as you charge your trip on that card. Chase Sapphire and United Airlines are two that provide up to $10,000 per person (limit 2) in trip cancellation insurance. If you priced trip cancellation insurance you'll see that this is a significant savings (trip cancellation insurance can easily run $500+ per person.)

    Mike
    Last edited by Mike Henderson; 08-25-2016 at 8:40 PM.
    Go into the world and do well. But more importantly, go into the world and do good.

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