Credit Card Fraud
Credit cards are a convenient, safe and flexible method of payment accepted in more than 200 countries worldwide. While credit card fraud can happen, banks take significant steps to protect customers and minimize the fraud as much as possible.
What is credit card fraud?
Credit card fraud can happen several ways. Your card could be lost or stolen and used to purchase goods and services. A criminal could obtain your card number and expiry date and use this information to buy merchandise by phone or over the Internet. Or criminals could tamper with payment terminals at retailers to obtain your card information and create a counterfeit credit card.
Your bank is there to protect you
Banks and the credit card companies take credit card fraud very seriously, and have highly sophisticated security systems and teams of fraud experts in place to monitor transactions, protect customers and prevent and detect credit card fraud. For example, the banks’ systems can automatically detect unusual activity in a customer’s account and take steps to prevent fraud from occurring.
Visa, MasterCard and American Express have zero liability policies for unauthorized transactions. Customers are protected when using credit cards issued by banks and are not responsible for fraudulent transactions made on their cards.
Canada is moving to chip-based technology
Banks and the major credit card companies are now moving to chip technology for debit and credit cards. In addition to the magnetic stripe on the back, cards now also have a microchip – really a small computer – in the card.
When making a purchase, rather than swiping your card and signing a receipt, you now insert it in the store payment terminal, punch in a personal identification number (PIN) and leave your card in the terminal while the transaction is processed. These cards use a technology called “cryptography” that allows the card and the store terminal to communicate with each other during the transaction and carry out security checks to ensure the card is valid.
The microchip is state-of-the-art in payment card technology and is extremely difficult for criminals to duplicate. In fact, chips cards have reduced fraud in a number of other countries where they are currently used. The implementation of chip-based technology is well on its way and most retailers and consumers are now able to do chip and PIN transactions.
Visa Canada and MasterCard Canada are bringing chip card technology to Canada on behalf of the banks and the financial institutions that issue Visa and MasterCard branded credit cards. To learn more about chip technology, visit their websites at:
Contactless payment cards have arrived
Banks are always looking at new technologies and security features to protect customers, and the credit card in your wallet may be sporting some new features.
You may have noticed these new kinds of payment cards while waiting in line at a store, or you may already have a contactless credit card – now offered by Visa payWave™ and MasterCard PayPass™. These cards allow you to quickly pay for small purchases by waving your card in front of a contactless terminal. A small radio frequency antenna and microchip inside the card allows a transaction to be processed without having to enter a personal identification number (PIN) or sign a receipt.
Contactless card transactions are processed through the same secure networks used for all other Visa and MasterCard transactions. Your card never leaves your hand and each transaction has a unique, encrypted code and changes every time the card is used.
It’s important to know that contactless cards are embedded with multiple layers of security to protect you. For example,
- Short range – Cards must be within a few centimeters of a reader for any data to be transmitted. The short range makes it difficult for criminals to gain access to card information from a distance and, even if they could, the card data cannot be used to create a counterfeit card and the encryption technology would make the stolen card information useless.
- Encryption – Each transaction you make with your card creates a unique encryption code, which expires after the transaction is finished. If someone was able to get close enough to steal data from your card, they would not be able to use the encryption code because it would have expired.
- Limited information – Your name is not transmitted during a contactless transaction. For Visa and MasterCard, the three-digit security code on the back of your card is also not transmitted.
- Low transaction limits – Contactless transactions generally have low transaction limits and any larger purchase will require you to enter your PIN. If you card is lost, this will prevent large purchases from being made.
- Zero liability – Visa and MasterCard have zero liability policies for credit card holders. In cases of fraud, you won’t be held responsible for fraudulent transactions.
How you can protect yourself
The banking industry works hard to prevent and detect credit card fraud using advanced technology and by assisting with police investigations. There are some simple steps that you can take to protect yourself as well:
- Report a lost or stolen card as soon as you notice it is gone. Your card issuer will cancel your card and issue you a new one.
- If you have a chip card, insert first. If the store terminal isn’t chip capable it will prompt you to swipe. This will protect you from having your card skimmed. And always remember to take your card when the transaction is done.
- Never lending your card or disclosing your PIN to anyone else
- Choose a PIN that could not be easily detected if your card is lost or stolen - don't use your birth date or address
- Make it a habit to regularly check your transactions online or on your monthly statement. If there are any charges that you didn’t make, report them to your card issuer right away.
- Never give out your card number over the phone or Internet unless you know you are dealing with a reputable company.
- Protect your Personal Identification Number (PIN): don't share it with anyone or write it down, memorize it.
- Sometimes scammers will try to trick people into revealing information about their credit cards either over the phone or through e-mail. It’s important to know that your credit card company or bank would never call to ask for personal information like your credit card number, expiry number, PIN, or the security number on the back of your card.
- Protect your credit card like you protect your cash. Never leave them unattended in your car or at work.
- Always check your card when it is returned to you after a purchase. Make sure it is your card.
- When travelling, carry your cards with you or make sure they are in a secure location such as a hotel safe.
- Make a list of all your cards and their numbers and keep this is a secure place. This key information is helpful when reporting lost or stolen cards.
What to do if you are a victim of credit card fraud
If you have charges on your credit card that you didn’t make or if you think that you may have revealed your credit card number when you shouldn’t have, contact your credit card issuer right away using the phone number on the back of your card. The card issuer will take the appropriate steps to protect you from fraud.
