Report: Fraud still a huge problem in Australia

By Vanessa Tripodi

Credit card fraud can be a constant concern for anyone who pays with plastic over the phone, on the Internet or in person. However, for the rising number of Australians who have experienced credit card fraud firsthand, they are not only left with a dent in their account balance and the risk of a black mark on their credit report, but also feelings of vulnerability and foolishness.

Fraud can happen so quickly that there can be a lot of damage inflicted before you even realise you have been targeted. As well as losing your credit card or your whole wallet, credit card fraud can be perpetrated if you have your bank details stolen from a statement in your mailbox, if you use an unsecured online payment system, or if you share or write down your PIN.

ACI Worldwide, which provides application software for electronic payment methods, recently compiled a report on credit card fraud in Australia, and how it compares with credit card fraud in the rest of the world. Of the 2,409 people surveyed around the world, 310 were from Australia. All were asked "Have you been a victim of fraud on your credit or debit card in the past five years?" Of the Australian respondents, 1 in 10 had been a victim of fraud once, 2.58 percent had suffered credit card fraud twice, 1.29 percent three times, and 0.64 percent more than three times.

Fortunately for all Australians, those results are significantly lower than for those overseas. Here are the numbers for respondents who have been victims of credit card fraud in the last five years:

• U.S.: 27 percent
• U.K.: 27 percent
• China: 15 percent
• Singapore: 15 percent
• Germany: 8 percent
• Dubai: 7 percent

With the introduction of chip and PIN technology, Australians should see even greater decreases in credit card fraud in as little as three years.

Chip and PIN technology

Chip credit cards appear very similar to regular credit cards, but their data is stored on a microchip embedded within the cards, making them more difficult to counterfeit. Each chip in each credit card contains unique information that enables the card to communicate with the issuer when it is used. Therefore, even if a chip credit card were to be replicated, the information in the microchip would not be correct.

The addition of a PIN, or personal identification number, to this system makes it doubly difficult for criminals to perpetrate credit card fraud, since they must know the proper code to enter, as well as possess a legitimate credit card.

Unfortunately, though the chip and PIN technology for credit cards was first introduced in Australia in June 2008, banks have been slow to introduce ATMs and EFTPOS facilities compatible with the new technology. For the chip and PIN credit cards to truly combat credit card fraud, compatible terminals must be rolled out across the country. Otherwise credit card holders with the new cards are simply operating with a false sense of security.

Even though credit card fraud in Australia is comparatively low when compared to credit card fraud overseas, it is still devastating to its victims. It is also important for Australians to remember that, even with new technology and security advances, you still need to be careful about divulging your personal details.

Article by Vanessa Tripodi

Published: August 19, 2009