I had read about it, and even trained my staff on it – but it didn’t really hit home until debit-card fraud victimized my daughter. She was careful with the use of her card and confidential pin number. But somehow, somebody obtained sufficient information to fraudulently access and empty her bank account.
March is Fraud Awareness Month. Consumer knowledge of debit-card scams is being heightened with the campaign slogan “Recognize it. Report it. Stop it.” And yet even with the increased attention, the problem grows.
Here’s how the scam works: the card can be “skimmed” to reproduce the information on the magnetic strip and create a replicate version of the card. Or thieves, more sophisticated with video technology, observe bank customers punching in their pin number even when they have every reason to believe they are alone.
Anecdotally, when the topic surfaces in conversations I’ve been a part of, everyone seems to have a story or first-hand experience. Has debit-card fraud reached epidemic proportions? The banking community says that only “a fraction of 1%” of debit-card transactions are fraud-related.
But our two recent calls to the Reporting Economic Crime On-Line “Phonebusters” hotline was greeted with the following recorded message: “Due to extremely high call volume, we are unable to answer your call now”.
Some stats:
- there are 35 million debit-cards in circulation in Canada (9 out of 10 citizens carry one.)
- as preferred method of payment among Canadians, debit-cards surpassed cash in 2000.
- Canada is the world’s second largest debit-card nation per capita, with almost 4 billion annual transactions. Sweden is number one, with the USA in third place.
- 2009 debit-card fraud cost $142.3M (according to INTERAC Association), an increase of 36% from the prior year.
Beginning in 2008 as an initiative to reduce fraud, chip technology has been added to the magnetic strip on the card. This process should be 65% complete by the end of 2010. Then magnetic strips will be discontinued over the next 5 years as the chip technology becomes more sophisticated and less likely to be copied.
The best risk management tactic – the common sense practice of taking reasonable precautions: shielding the keypad as you enter your PIN, checking your account regularly, and recognizing that you too could be targeted at any time.