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Credit Card Fraud

Credit card fraud has the unique distinction of being a modern crime. Within the last decade, credit card fraud has become a complex, worldwide law enforcement problem that affects the economy and is often closely related to crimes of violence and organized crime.

Credit and charge card fraud costs cardholders and issuers hundreds of millions of dollars each year. It is estimated that there are over one billion credit cards in circulation worldwide today. The growth rate of fraud and the dollar amounts involved are increasing.

Stolen credit cards or "hot card" losses can be reduced with alertness and proper security measures by you and your employees.

Warnings for Merchants

Account information.
Do not divulge cardholder account and transaction information over the telephone unless you initiated the call.

In one scheme, a caller posing as a bank representative informs the merchant that "the system has been down," and they need to reprocess the transactions. This individual is then able to use the cardholder information the merchant supplies to perform fraudulent transactions or create counterfeit cards.

In a similar scheme, an individual posing as an FBI or U.S. Secret Service Agent requests transaction information for comparison with a list of account numbers they uncovered in an arrest. The unsuspecting merchant gives the account numbers, names, expiration dates and any known addresses to the caller. This information can then be used by the fraud perpetrator to commit credit card fraud.

Notify your bank immediately if you receive such a call.

Laundering.
Individuals may approach you to deposit - or launder - sales drafts for them. Usually these merchants do not have a contract to accept credit cards with a bank either by choice or because they cannot obtain one. In exchange for depositing their sales drafts, they offer you a percentage of the deposit ranging from one to 20 percent.

Laundering is a violation of the law and you could be charged with being an accessory to fraudulent activity.

You are responsible for any transactions deposited into your merchant account. As many as 100 percent of the laundered transactions may be charged back on sales that you did not generate and debited from your account.

Merchants all over the country have suffered the consequences of draft laundering. Many have been forced to declare bankruptcy to cover the losses.

What to look for:

• The chatty customer or the one who delays a purchase until the clerk is upset.
• The customer who hurries a clerk just before closing time.
• The customer who purchases without regard to size, color, style or price.
• The customer who refuses alterations that are included in the purchase price.
• The customer whose appearance is inconsistent with his or her type of purchases.

Visa Card Security Features

(Front of card)
A hologram depicting a flying dove that appears three-dimensional when tilted side to side. On counterfeit cards this hologram appears two-dimensional.

A border of micro printing surrounding the Visa blue, white and gold bands design. This printing can only be read with magnification and contains the first four digits of the account number.

Under ultraviolet light a flying dove can be seen in the center of the card.

An embossed flying "V" to the left of the Visa logo.

First four digits of the account number printed on card above embossed numbers. By the year 2000 these will appear below the embossed numbers.

All Visa account numbers are either 13 or 16 digits long. Starting in the year 2000 all account numbers will be 16 digits long.

All Visa account numbers start with the number 4.

(Back of card)
The word Visa continuously appears at a 45-degree angle in blue ink on the signature strip. By the year 2000 ink colors will alternate between blue and gold.

If strip has been tampered with the word "Void" will show through.

By the year 2000 all cards will state "not valid unless signed" below the signature strip.

MasterCard Security Features

(Front of card)
A hologram depicting two interlocking globes, which appear three-dimensional when tilted side to side with the MasterCard name in the background. On counterfeit cards, this hologram appears two-dimensional.

Under ultraviolet light a M and C can be seen in the center of the card.

First four digits of the account number are printed on the card above the embossed numbers.

All MasterCard account numbers are 16 digits long.

All Master card account numbers start with the number five.

An embossed M or C appears to the left of the logo. Older cards may not have this feature.

(Back of card)
Account number and three-digit authorization code appears in italics in the signature panel.

The word MasterCard continuously appears at a 45 degree in multi-colored in on the signature strip. Cards prior to 1995 had MC and interlocking globes.

If strip has been tampered with, a white mark will appear where tampered.

For more information regarding credit card fraud, contact the Business Watch office at 661/267-5153.