Here's a good reason to carefully guard your credit card information. A new report predicts thieves are stepping up their credit card fraud activities.
The Radial eCommerce Fraud Technology Lab reports what it calls an alarming increase in credit card "testing." That's when criminals who have obtained stolen credit card numbers use them to make small purchases, usually for five dollars or less.
The purpose is to make sure the card is still good. If the transaction goes through, the fraudster knows the card is valid. The purchase is small enough that it doesn't alert the cardholder that there's unauthorized activity.
That then gives the credit card thief the green light to make a big purchase, maybe for several thousand dollars.
Testing up 200%
Radial is concerned because "testing" is up 200% over last year. It concludes that can only mean that credit card thieves are ramping up their activities.
While this mostly affects retailers, consumers have skin in the game as well. In most cases, liability for fraudulent purchases is limited to $50. Still, it's $50 you don't want to have to pay. It also means the inconvenience of having your old credit card cancelled and a new one issued.
If losses rise dramatically for retailers, it will also mean consumers will likely pay higher prices. After all, the businesses have to recoup those losses some way. So it goes without saying consumers have a stake in helping reduce credit card fraud.
It might also get harder to use your credit card to make a transaction. Radial speculates retailers may start using security tools that result in more legitimate purchases being rejected.
Aren't cards supposed to be more secure now?
This is all happening in an environment in which the credit card industry has mostly switched over to EVM chip cards, which are supposed to be much more secure than cards with the magnetic strip. But the National Retail Federation argued from the beginning of the process that chip cards that only required a signature, and not a PIN, would still be vulnerable to fraud.
In November 2015, attorneys general from eight states and the District of Columbia joined retailers in urging banks and credit card companies to add a PIN to card security. The state officials said countries that have implemented the chip and PIN technology have seen a dramatic drop in credit card fraud.
Besides having your credit card actually stolen from your wallet, the most likely way a thief will steal your data is from a credit card "skimmer," installed over the top of a legitimate card reader. One of the most likely places to find a skimmer is on a gas pump.
Experts advise consumers using their credit card at a gas pump to look closely at the card reader to see if it looks different. Also, try to move it with your hand. If it's not firmly in place, it could be a skimmer. Believe it or not, these devices are sometimes put in place with cheap glue and double-sided tape.