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Fraud strikes about 1 percent of credit card transactions ans skimming threatens debit card users

There are two times as many credit card fraud cases involve phone or online transactions than retail sales, according to  new data from FICO. Researchers found that sophisticated counterfeit  rings have raised the stakes for merchants over the most recent 20 month period.

There have been reported an increase in “skimming,” a technique where criminals  tamper with ATMs and payment devices to capture both card details and (PIN) personal  identification numbers. Criminals can use magnetic stripe blanks or other stolen  cards as “clones,” passing details of a stolen account to a payment device  without the victim’s knowing. ATMs, grocery stores, and gas stations  topped the list of places where criminals use stolen or cloned debit cards.

Criminals test stolen credit cards online before shopping in public places

Fraud rings usually test the stolen  cards with smaller online transactions. The online tests as a “relatively safe” way for thieves to learn whether  victims notice extra purchases on their monthly statements.

Researchers at J.D. Power and Associates, where  the results of an annual customer satisfaction survey show that nearly a quarter  of credit card problems involve fraudulent transactions.

Debit card usage grows nationally

FICO’s numbers show American consumers rely on debit cards more than  ever, driving a fifteen percent increase in authorization compared to the  previous period studied. Federal rules leave consumers responsible for only $50 of  fraudulent debit card transactions if reported within 2 days, though Visa  and MasterCard  now require member banks to follow tougher “zero liability” rules. Debit card  fraud can leave consumers on the hook for bounced check charges or  failed bill payment fees while investigators to restore the funds.

The FICO monitored millions of credit card  transactions between January 2010 and September 2011. Researchers use the data  to develop complex algorithms that protect client issuers and their cardholders  from identity theft and fraud. Analysts found fraudulent transactions in only 1  percent of their sample.


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