March 13, 2007

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  NEWS: Fraud Is Still Huge

  With all the knowledge transmitted about fraud these days in newspapers, online, and on the evening news, it's a marvel that crooks are still finding ways to defraud people of their hard-earned money. And yet they do – a lot. For every prolific "phishing" scam and/or identity theft scenario that makes headlines, piles more slip through the cracks, along with consumers' dollars and cents. The real news is that fraud is everywhere, and that perhaps the situation is worse than we think. In fact, it is estimated that, for every $100 spent in America, six cents are lost to fraud.
  
  Debit card fraud is on the rise. Skimming scams at TJ Maxx and Stop & Shop stores in New England made the national wires, and illustrated to the public just how pervasive this crime really is. Skimming involves stealing someone's card information – in it's highest "tech" form, it takes the guise of tampering with a card reader device to record and transmit the account numbers of cards passed through it However, skimming can come in lower-tech packaging as well: imagine someone hacking into a payment network or installing a miniature camera to steal card numbers at an ATM. Actually, let's get even simpler: picture the crook peering over your shoulder to watch you enter your PIN number. Per the Electronic Funds Transfer Association, industry lost $546 million to debit card fraud in 2004. Broken down, that's $8 million through PIN purchases, $193 million in signature purchases and $345 million in ATM transactions.
  
  Sadly enough, people are aware of this problem – they just feel powerless to stop it. Surveys show that people fear identity theft and loss of personal information more than terrorism, unemployment, or natural disasters. And yet, the U.S. lags behind other industrialized nations in implementing more secure credit card technology – it is one of few not to have started implanting security chips in debit cards. The "chip and PIN" system has cut fraud in a dramatic fashion in Britain in the year since it was implemented. One reason American card issuers are loathe to switch over is cost – a "chip" card costs about a dollar to make, versus the magnetic strip cards we all use now, which go for mere cents.
   

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