In 2003, The Wall Street Journal estimated that the credit card industry generated US $500 million in
annual revenue in research and investigation fees paid by consumers and businesses.[citation needed]
This additional revenue offsets some of the costs incurred by credit card issuing and processing
companies' when investigating chargeback claims. Since 2005, credit card fraud in the UK and America has
increased by 350% on average according to Reuters.[citation needed]
Credit card merchant associations, like Visa and Mastercard, and their member banks receive profit from
transaction fees, known in the industry as the "discount rate." The discount rate is a percentage of the
amount of the transaction, with typical merchants receiving discount rates in the range of 2% to 4%.
[citation needed] Merchant associations are thus motivated to pursue policies which increase the
aggregate amount of money transferred by their systems. Many merchants believe this pursuit of revenue
generation reduces the incentive for credit card banks to implement procedures to reduce credit card
crime, particularly since the cost of investigating fraud is usually higher than the cost of a write-
off.[citation needed] However, merchant associations are not assuming these costs; they are instead
passed on to merchants as "chargebacks." This results in substantial additional costs: not only has the
merchant been defrauded for the amount of the transaction, but he is also obligated to pay a chargeback
fee, and to make matters worse, the merchant is not even reimbursed for his transaction fees. [citation
needed]
Merchants have begun to request changes in State and Federal Laws to protect consumers and merchants
from fraud, but the credit card industry has opposed many of the requested laws.[citation needed] In
many cases, merchants have little ability to fight fraud, and must simply accept a certain percentage of
fraud as a cost of doing business.[citation needed]
Because all card-accepting merchants and card-carrying customers are bound by contract law, according to
the agreements they sign with their processing / issuing banks, respectively, State and Federal law has
a smaller role in preventing merchants from being tricked.[citation needed] Payment transfer
associations enact regulatory changes, and issuing / acquiring banks, merchants, and cardholders are
contractually bound to these new regulations.[citation needed]
[edit] The Criminals
In the US, persons that commit credit card crime largely go unpunished and repeatedly victimize
consumers and businesses.[citation needed] The Secret Service handles crimes involving the US money
supply; they have a limit of $150,000 before investigating each crime.[citation needed] Most credit card
criminals know this and keep purchases from any one business below $150,000. With credit card crime
occurring across state lines, criminals often are never prosecuted because the dollar amounts are too
low for local law enforcement to pay for extradition.[citation needed]
[edit] Reporting Credit Card Fraud
If you lose or have had your credit card stolen, you should immediately report it to your card issuer.
Once you report the incident, you are no longer responsible for unauthorized charges made on your card.
In the US, credit card fraud can be reported to the Federal Trade Commission (FTC) and to local and
regional authorities. It is the standing policy of the FTC not to investigate reports where the value of
fraud does not exceed $2000. Local law enforcement may or may not further investigate a credit card
fraud, depending on the amount, type of fraud, and where the fraud originated from.
If you are a merchant and you suspect orders have been placed for your products/services using stolen
credit card information you will need to contact VISA/MC/AMEX/DISCOVER to obtain the issuing bank's
phone number then call the bank to report that you suspect that their customer's credit card information
has been stolen.
[edit] Notes and references
1. ^ http://finance.yahoo.com/q/bc?s=USDGBP=X&t=2y
2. ^ WikiCrimeLine Fraud Act 2006
3. ^ http://creditcards.lovetoknow.com/Credit_Card_Generator
1 comment:
There is a new type of credit and debit card fraud, thanks to the advent of the new contactless payment systems.
These cards, over 50 million of which were issued last year in the United States alone, are embedded with a miniature micro-processor and an antenna that broadcasts the account information of the card holder at 13.56 MHz. These contactless pay stations use a system that is not only inexpensive to duplicate on the home hobbyist's workbench, but quite inexpensive, as well. In fact, $20 and a trip to your local Radio Shack will give you all you need to become a thief of this sort.
They call themselves "Cloners."
The reason for the name is the process they use. They set their antenna, which fits easily into purse or pocket, to "ping" for cards that are RF (Radio Frequency) Enabled. The card responds by transmitting all necessary information to charge the account. This is, after all, what it was programmed for. The laptop or PDA gathers, or "Harvests" the data received. They do this in the most public of places, and it is absolutely undetectable when occurring.
From that point, the thief will then carry the information home or to another suitable location and begin the cloning process. Another wave of the antenna over a blank card, which can be purchased for two or three cents, and they have a form of payment that is electronically indistinguishable from the original.
Sadly, Organized Crime and Terrorist organizations such as the LTTE out of Sri Lanka are using credit card fraud like this to fund their destructive activities.
Does that scare you? It should, and it did us. To respond to this threat, Wisteria House Products of Phoenix Arizona has developed the Armadillo Dollar. It is a simple, low-cost device you slide into your wallet that blocks the transmission of these radio waves.
If you decide you want to put another layer of protection between you and the wireless thief with our product, use the code “TopDog” when ordering. That’ll take $5.00 off the regular $25.00 price, at least while we’re introducing it to the market.
It is, quite simply, the BEST RF-Shielding product of its kind in the world.
You have my word on it.
I am Ron Hatton.
We are www.ArmadilloDollar.com and proud to be All-Americans!
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