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Tackling credit card fraud

The credit card, a symbol of prestige and status not so long ago, is now a symbol of convenience. The little piece of plastic that only company big wigs used to flash around has now found its way to 328,000 wallets island-wide. Expect to see more of them at your nearest retail store soon, as the banks engage in a fierce competition to distribute more cards and appoint more merchants equipped with card terminals.

That other piece of plastic, the Automated Teller Machine (ATM) card, is even more common. Virtually everyone who has a bank account owns one. The advantages of both credit cards and cash cards are obvious: Money can be withdrawn any time of the day and there is no need to carry large amounts of cash.

But there is a big price to pay. A corresponding rise in related fraud is often seen with the proliferation of any monetary instrument. Law enforcement authorities have reported an alarming rise in credit card and ATM frauds. An estimated 1,000 fake credit cards that closely resemble the genuine articles are said to be in circulation locally. The modus operandi of the racketeers is simple: These cards bear numbers issued to genuine cards and their owners are thus billed for purchases they had never really made.

Newspapers reported yesterday that the Criminal Investigation Department (CID) has proposed new legislation to tackle credit card and ATM frauds. A number of local and international banks that issue thousands of new cards per month are understood to have called for new legislation following the detection of several multi million-rupee card frauds. Government authorities are reported to be closely studying the proposals.

The Internet has literally opened a web of opportunity for the racketeers. There are thousands of local and international e-commerce sites that request credit card numbers for transactions. One can buy almost anything on the Internet with a click of the mouse. A valid credit card number is all that is needed. Since most of the credit cards in circulation today are accepted internationally, the fraudsters have no problems in billing someone else for their purchases via the Net. No signature or identification is needed.

It is clear that the government authorities and the banks themselves must evolve a strategy to beat the conmen and to protect the genuine card user. Using the latest technology might help. Some of the new-generation credit, debit and cash cards have a tamper-proof photograph of the owner and an embedded 'smart' microchip that contains extensive details about him or her. Experts predict that retinal scans may be obtained by merchants in the near future to verify the authenticity and ownership of cards. Some websites already demand additional card-related and personal information that only the genuine owner is supposed to know, before authorising a transaction. Many websites have enhanced their security encryption systems to prevent the leakage of secure information to hackers.

The authorities must seriously consider introducing such measures in order to stem the tide of credit card and ATM frauds that result in multi-million rupee losses to the economy. While such measures may initially cost more to implement, the long-term benefits far outweigh the financial outlay.

While pursuing these options, police and bank investigators must focus their collective energies on tracking down big-time card racketeers. Computer crime and credit card fraud are now global phenomena thanks to the Internet. Investigators have to work closely with the Interpol, local and international banks and e-commerce merchants to bust such scams.

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