When Jenny Vaughan received her July statement for her Lloyds Bank Access Classic Reserve card and found a pair of unrecognised deductions for pounds 200.46 payable to Innovations catalogue company, she did all the right things. She contacted Lloyds and then Innovations, and discovered they were the first two payments of a series amounting to nearly pounds l,000. She established immediately that this was not a case of simple error: she had never made a telephone order to Innovations, had made one purchase from it years ago, and Innovations did not have her name and address on its computer.
In the case of these payments, the card number was hers and the name almost hers (Mr JP Vanghan), but the address was different. Someone, somewhere, must have noted and then used her credit card number. A clear case of fraud, it might be thought. But this was not a perception shared by Lloyds. She was told that this was "a disputed transaction" and that it would only be classified as fraud after the next unauthorised deduction.
Jenny says: "Eventually, after several phone calls and letters, Lloyds did accept that it was fraud, though they then did try to charge me interest on part of the fraudulent amount."
Jenny never found out how someone had got hold of her card number, nor indeed whether Lloyds has caught the fraudster. The case is part of one of the fastest growing areas in plastic card fraud. While still accounting for a relatively small percentage of frauds overall, and costing the industry a relatively modest pounds 6m in 1996, that figure represents a 50 per cent increase on the previous year at a time when plastic card issuers claim to have put a cap on fraud. It is likely to increase even more as customers turn to telephone ordering.
Card fraud generally has attracted some ingenious criminals going to elaborate lengths to acquire card information. One involved filming users of the card of one particular bank whose card information was helpfully written large, and therefore could be read when magnified. A recent one involved a dummy auction for office stock where potential customers were required to swipe their credit cards before entering the auction, thus giving the organisers useful card details.
There has been considerable anxiety about giving out credit card details over the Internet, although it could be argued that in practice card details are more vulnerable in phone transactions. Mail order companies can make it even easier for the fraudster by offering monthly terms on payments, as with Innovations: while this can help genuine customers, it might also help the fraudster as there is less chance of the credit limit of the real owner of the card being breached. And if the bank itself has procedures that militate against speedy recognition of a fraud, then there will be a delay in following up the circumstances - so "JP Vanghan", in this case, had plenty of time to make off with his or her purchases.
There are guidelines the retailers are meant to follow: to deliver things only to the address on the card (with Interflora an obvious exception) or to demand authorisation on collection, though they are not always acted on. Twice recently my card was used, with my permission, to order goods (coach and cinema tickets) but no card or authorisation had to be produced to claim them.
Barry Fergus, the payment strategy director of Barclaycard, acknowledges that frauds related to telephone purchases are increasing. But he says they need to be set in context. "We believe that 'card not present' business represents 15-20 per cent of our total business, and 'card not present' fraud represents 15 per cent of total fraud. Fraudulent activity is growing because this is the fastest area of growth in our business." There is also a view that in practice, since the retailers take the financial risk on these transactions, there is very little will by the banks to investigate. Richard Tyson-Davies, of the Association for Payment Clearing Services, says that it is made clear to retailers that it is a high-risk area. "It is that retailer's loss rather than the bank [if the payment turns out to be fraudulent]. We have just produced a guide for retailers. It gives a list of things to look out for, to help prevent some of the scams: things like not taking orders from mobile phones, not delivering goods to hotels. Some of it is purely common sense."
Obviously a number of unrecognised payments turn out in the end to be perfectly legitimate. There are cases where a holding company has a different name to the retailer from which the goods are bought and is not recognised by the customer. But it is always worthy querying your statement.
Never letting the card out of your sight is one obvious safeguard for the customer, though not infallible as information used by fraudsters could equally be picked up from a till receipt. Advice from Liz Phillips, of Credit Card Research Group, is: "Beware cold-calling when you are asked for your credit card number. Don't ever give your number out over the phone. And always check your statements."
That might be the best precaution: to keep receipts and check them rigorously against monthly statements. And tell the bank straight away. In most cases you will face no liability for credit card frauds where you have acted responsibly.
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