FOOL SCHOOL
Avoiding Identity And Card Fraud

July 19, 2004

If you're anywhere near a photocopier at the moment, take out all the plastic cards in your wallet/purse, lay them face down on the glass and copy them front and back. Hide the resulting bits of paper in a safe place at home so you have an instant reference to numbers and sort-codes if they ever get lost or stolen.

In fact, if you want to be extra efficient, you could also print off the list of emergency contact numbers for lost or stolen credit cards from the Cardholders section of the Cardwatch website.

The fact is, card and identity fraud is big business these days and you can get caught out in several different ways.

Counterfeit cards: These are often produced by a practice known as skimming which you can fall victim to if you let your card out of sight when paying a bill. (Handing your card over at the end of a meal in a restaurant or, worse, leaving your card behind the bar when you're treating friends to an evening is a cardinal sin!) A dishonest cashier could secretly copy the magnetic strip by swiping it through a special card reader so the information can be used to make a counterfeit card that is ripe for a spending spree.

Cards lost or stolen: For the moment all a fraudster needs to do is to copy your signature which you've very kindly written on the card for him to see. Over the next couple of years using a lost or stolen card should become more difficult with the advent of the new CHIP & PIN method of paying with plastic.

Consumers will be able to verify purchases by keying in a four-digit PIN (Personal Identification Number) at the till rather than signing a receipt. The system is being gradually rolled out and should ensure most people have the new cards by the end of 2004 with retailers fully switching to the new-style keypads by the end of 2005.

Card not present fraud: What do you do with your unwanted receipts? If you have a tendency to just chuck them in the bin then you could be making it jolly easy for a fraudster to rifle through the dustbin and go on a spending spree with the credit card details they find. Unfortunately some receipts carry rather too much information and a collection of them could, between them, contain all the details necessary for an opportunist thief to go shopping for DVDs at Amazon.

Identity Theft/Fraud: Identity theft is the 'misappropriation of the identity of another person'. In other words, someone impersonates you for whatever reason – usually to obtain goods and services in your name. This often affects your credit rating and can result in you being turned down for a loan or credit card or even a mortgage. (Strangely, this isn't actually a crime in the UK at the moment although the Government is considering making it one).

It only becomes a crime when that identity is actually used to obtain goods and services by deception at which point it becomes known as identity fraud. Again, this can arise because of the sort of information you put in your dustbin.

Tips to keep your cards safe:

• Keep your card in sight at all times when making a transaction
• Dispose of unwanted bank statements, utility bills and receipts carefully – preferably by shredding them
• Check statements for unfamiliar transactions
• Report missing cards immediately
• Be wary of people standing too close behind you when using a cash machine or one of the new Chip & Pin key pads in stores

At the moment it's the issuers of plastic cards rather than individual cardholders who bear the initial cost of fraudulent use. Your maximum liability on credit, debit, and bank-issued charge cards is £50 for fraudulent transactions made before the issuer is notified and, in most cases, issuers waive even this small liability.

Obviously your liability is unlimited if you've been grossly negligent such as writing your PIN on the card or if you've played a part in the fraud yourself but an innocent person who gets his cards nicked is not liable for the money that's spent on it by a thief.

Beware though - the arrival of the new CHIP & PIN cards will make it easier for banks to transfer liability on to your shoulders. If a thief uses your card because he's managed to find out your PIN then that's probably because you've written it down somewhere for him to find.

And finally, apart from the various kinds of identity and card fraud, you also need to be aware of the 'phishing' type of fraud that arrives by email. The word was coined by hackers who have developed lookalike websites of banks in an effort to trick you into parting with your account numbers and passwords. 

The key bit of advice is to realise that banks will never ask for personal financial details via email so be very wary if you get an email that purports to be from your bank requesting such information. If you're asked for information via email then always go directly to the company's website by typing the URL into the address box - don't click on the link within the email in case it takes you to a fake lookalike site. And, when dealing with financial information or transactions over the internet, always make sure that you can see the little padlock in the bottom right-hand corner of your screen and that there is an 's' after the http in the address (https) which indicates that the site is secure.

Find out more in our Banking Centre.