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New study finds 1 in 10 Americans are victims of credit card fraud

The numbers are enough to make anyone jumpy.

Ten percent of Americans have been victims of credit card fraud.
Seven percent of Americans have been victims of debit or ATM card fraud.
And even though they never lost their cards, 5 percent of Americans say their credit card numbers have been used without permission.

The statistics are from a new study by BAI Global Inc., a research firm in Tarrytown, N.Y. The study, conducted in the first quarter of 2000, surveyed 1,000 Americans about their experiences with and attitudes about credit and debit cards and identity fraud over the past year.

From hacking to dumpster diving
How are thieves able to get their hands on someone's card information? It's surprisingly easy.

"It's everything from high tech stuff as we saw at Western Union to just dumpster diving and someone at a retail establishment writing down people's credit card numbers," says Ken McEldowney, executive director of Consumer Action, a San Francisco-based consumer advocacy organization.

"One of the real problems has been that with the technology out there it's relatively easy to make a duplicate credit card."

It's easy to see why consumers might feel uneasy. Some folks are so worried about tech-savvy thieves and computer hackers that they refuse to shop on the Internet. Only 15 percent of Americans say they feel comfortable using credit cards on the Internet, according to the BAI Global study.

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"The concern is that the Internet is somehow so big that people who would do evil anywhere in the world can somehow hack in and get this kind of information," says Robert Skolnick, executive vice president at BAI Global.

That's precisely what happened at Western Union earlier this month when hackers stole credit and debit card information from 15,700 online customers.

Reassuring consumers about their privacy
The credit card industry hopes to assuage people's fears of online fraud by limiting cardholder liability. Earlier this year, Visa and MasterCard switched to zero liability, which protects cardholders from paying a penny for unauthorized online charges. Prior to the change, cardholder liability was capped at $50.

Discover has what it calls "100 percent Fraud Protection," which states that its cardholders are not responsible for any unauthorized online card use.

American Express has had an online fraud protection guarantee since 1998. Earlier this month, it beefed up its protections with the introduction of Private Payments. This service allows American Express customers to make online purchases without transmitting an actual credit card number over the Internet.

When American Express shoppers are ready to make a purchase, they visit the Private Payments section of the company's Web site. A unique Private Payments number and expiration date is created and linked to a customer's American Express account. The customer then transfers a Private Payments number onto a merchant's order form. Each number can only be used once. The number expires after the merchant authorization process is finished.

"It's a simple, safe, secure way to shop online," says Molly Faust, a spokeswoman for American Express.

"It's more secure because you're never actually sending personal account information over the Internet."

Common-sense tips
The best way to minimize online fraud is by using some old fashioned common sense while shopping:

  • Find out if the Web site you are visiting has a privacy policy. The same thing goes for your card issuer. Know how your personal information will be handled.
  • Make sure your transactions are handled through a secure or encrypted mode. Most merchants use SSL, the secure socket layer protocol. You will know you're on a secure site if the Web page on which you conduct your transaction begins with "https:" instead of the usual "http:".
  • Print out privacy policies, warranties, price guarantees and other important information.
  • If you're shopping with a merchant for the first time, look for the Trust-e symbol or a Better Business Bureau online seal, which indicate the seller has been independently audited and deemed trustworthy.

Consumer experts also urge people to keep close tabs on their credit and debit cards. Stay on top of your finances so you'll know if a bill's missing or if a card you haven't used in months starts popping up charges.

Buy a shredder and destroy bills, pre-approved credit offers and other documents with personal information before throwing them out. Limit the number of cards you carry.

"The fewer cards you have. The fewer cards you have to keep track of," McEldowney says.

"Only have one credit card and one ATM card. Only give personal and financial information to people you trust."


--Posted: Sept. 27, 2000

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