South Africa's five major banks have appointed Retail Decisions, a British fraud-busting company, to deal with the growing problem of credit card fraud, which costs an estimated R80 million a year.
Shops and companies tend to write off losses from fraudulent transactions as business costs, which means that you, the consumer, end up paying more for goods and services.
Nigel Whittaker, the chairman of Retail Decisions, says credit card users carry no financial risk in transactions where a card is not present - such as internet, mail and telephone sales - because banks, in terms of Visa and Mastercard rules, are obliged to reverse transactions you dispute unless they can prove that you used the card.
But shops and businesses that accept credit cards as payment are at risk of losing money through fraud.
Carl Clump, the chief executive officer of Retail Decisions, says using the internet, the postal system and the telephone to commit credit card fraud is a growing problem globally.
Typically, if you do not physically sign a slip when you make a purchase, it is the shop or business that carries the liability when you dispute a transaction.
Credit card fraud is sometimes viewed as a victimless crime, but, Clump says, it is increasingly being linked to serious violent crime as criminals resort to force to obtain credit cards. It has also been found that the proceeds of credit card fraud often fund other crimes.
Crime techniques
Some common ways in which credit card fraud is committed are:
* Creating credit card numbers: It is possible to generate card numbers through programs on the internet. Fraudsters try these numbers until they find one that will allow them to pay for services or goods in a situation where they do not have to physically present a credit card.
Recently, in Durban, a computer hacker was caught after using this method of obtain credit card numbers to pay his telephone and electricity bills;
* Lost and stolen cards: These cards are frequently used by fraudsters to make purchases;
* Discarded purchase slips: Think carefully before you throw purchase slips in the bin at, for instance, a shopping centre. Fraudsters rummage through bins to find slips which contain details such as the credit card numbers and your name and telephone number. Using these details, the criminals can have a spending spree at your expense.
To prove the point, a policeman investigating card fraud was able to book and pay for an airline ticket from London to Brussels using the details obtained from a slip in a shopping mall; and
* Skimming: Criminals can swipe your credit card through a device that records the details on the card. This can be done, for example, when you pay for a meal at a restaurant. The device can be bought for about R350 over the internet.
A syndicate operating in Johannesburg was until recently using this method to obtain credit card details.
Combating fraud
It has been difficult to catch credit card fraudsters because banks and merchants maintain their own databases, and only a limited amount of their information has been shared.
Companies that sign up with Retail Decisions get access to an extensive fraud-screening database which operates in real time. Every card that is presented for payment is electronically run through the database and the merchant will receive an answer to accept, challenge or deny the credit card payment.
The database operates globally and holds up to seven million of the most recent card transactions in countries such as the United States, Britain and Australia.
The information is analysed and the software will alert the user if, for instance, a credit card is used in Cape Town at 12pm and half an hour later in Johannesburg, because it is not possible to travel between the two cities in such a short space of time.