October 14 2007 by Ellen Roseman
I’m really concerned about payment fraud and identity theft (an occupational hazard, given what I do). So, I can’t help noticing how often companies ask for personal information without paying attention to privacy or security concerns.
My travel agent asked me to fax my credit card number and three-digit security code. No way, I said. I’ll give you the forms in person, but I’m not giving you my three-digit code (or CVV2). Show me why you need it and if you can’t, you won’t get it.
The University of Toronto wanted both a credit card number and CVV2 for my son’s meal plan. But since that was an online transaction I initiated, I agreed to supply it. The code provides extra security for the retailer and the cardholder in situations where the card can’t be handed over in person.
Tonight, we went out for dinner with friends who had been the victims of debit card fraud. They were driving home from their cottage and stopped at a gas station, where the wife used the CIBC automatic teller machine to take out cash. Later, while checking her bank statement, she noticed a couple of withdrawals with extra fees. But that didn’t make sense, since she never used other banks’ ATMs, only CIBC ATMs.
When she called the bank, the first question was: “Did you withdraw cash at a gas station?” Fraudsters install hidden cameras that take pictures of your debit card and PIN at places that aren’t as secure as bank branches. And unless you check your statements really carefully, you might not even spot those small withdrawals that aren’t yours.
Thicken My Wallet, a personal finance blog, found a rather large ATM withdrawal ($361.29) on his bank statement. He discovered that his card had been skimmed and withdrawals made from outside the country. The odd amount was because of currency conversion.
He had two observations to make after this experience, while waiting for the money to be reimbursed by his bank:
If someone wants to commit fraud they will. Just try to catch it as quickly as possible to minimize the damage. I caught the withdrawal by pure dumb luck – it appears I found it within 6 hours of it happening. The moral of the story: donâ€™t wait until you get a bank statement to check your balance. Check it often for cash flow and fraud prevention purposes and report anything out of the ordinary immediately.
As dumb luck on my part and not part of any design, I never raised the withdrawal limit on my bank card in the 15 years since I’ve had this account. Thus, they hit the ATM withdrawal limit quickly. If you donâ€™t need large amounts of cash at one time, limit your ATM withdrawal maximum for both budgeting and fraud prevention purposes.
One day, Canadians will have much more protection from card fraud. That’s because every card will have a computer chip embedded in it. It’s fun to read the fancy footwork in a Q&A published by the Interac Association, trying to say the chip is safe without saying the magnetic stripe is not so safe.
Here’s what you need to konw:
Financial institutions will be required to store the same type of information on the chip that is currently stored on the magnetic stripe. But while the information is the same, it will now be stored within the chip, which is personalized with data unique to the financial institution and is more difficult to duplicate. This will significantly reduce debit card skimming and the production of counterfeit cards.
If only chips were here now! But the transition will take years. Interac has a deadline of Dec. 31, 2012, after which magnetic stripe transactions will no longer be accepted at ATMs. And it won’t be until Dec. 31, 2015 that magnetic stripe transactions will be phased out at the point of sale.
So, pay attention to your cards and your monthly statements. Your scrutiny is all that’s keeping you from losing money to sophisticated thievery.