How to avoid online card fraud

by Sarah Modlock

15 November 2005

I've left it as long as possible before mentioning the 'C' word in this column. But it had to happen sometime. Apparently, around ten million of us will spend almost £3 billion buying.... Christmas presents on the internet this year. With savings of up to 20% on some items, it's easy to see why. Frankly, anything which saves me from the relentless festive music (how do shop assistants stand it?) and endless crowds, is a blessing.

But before you settle down with your mouse and your credit card, it's time to wise up about the latest trends in online fraud.

As Chip and PIN became effective at fighting certain types of card fraud this year, thieves were forced to look for weaknesses in the other ways we use our plastic. It didn't take them long to exploit transactions via the internet, phone and mail order. The result is that so-called 'card not present' fraud has become the latest way for them to steal our money.

So while card fraud losses involving counterfeiting, lost and stolen cards, cards missing in the post and even ID theft have all dropped by up 37%, fraud involving 'card not present' has leapt 29% to £91million in the last six months, the Association of Payment Clearing Services (Apacs) says. And most of this is being committed online.

I had a call from my card issuer last week checking whether a 'card not present' online transaction with an American company was legitimate. Luckily it was but I was very grateful for the call and the fact they delayed payment until they had checked with me. But we should not rely solely on the vigilance of our card issuer.

The majority of Internet card fraud involves a criminal obtaining genuine card details in the real world that are then used to shop online. We can all minimise the chances of becoming a victim by simply keeping cards and card details as secure as possible and not letting their cards out of our sight.

Also, whenever there is the option whilst shopping online, sign up to 'Verified by Visa' and 'MasterCard SecureCode', both of which then make it more difficult for a fraudster to use their card details. They enable cardholders to authenticate themselves when shopping online at participating merchants through the use of a private password or code. More information is available at www.visaeurope.com/verified and www.mastercard.co.uk/securecode. These systems make plastic cards safer to use online and are, therefore, a valuable aid in the fight against card fraud.

New research commissioned by Apacs shows that millions of Britons are not even aware of some the basic online pitfalls from which they can easily protect themselves:

•  One in four online shoppers do not check whether a website is safe and secure - ensure that the security icon - the locked padlock or unbroken key symbol - is showing in the bottom of your browser window before sending your card details. The beginning of the retailer's internet address will change from 'http' to 'https' when a purchase is made using a secure connection.

•  One in eight online shoppers have failed to log out when shopping online, leaving their financial details available to others

•  Almost half of women and half of 16-24 year olds in the UK do not know what phishing is - this is where fraudsters send e-mails that seem to come from a genuine online bank or business, in an attempt to trick customers of those companies into disclosing personal security information. Prevent yourself from becoming a victim by being wary of all unsolicited e-mails, even if they appear to originate from a trusted source. Although your bank may contact you by e-mail, it will never ask you to reconfirm your login or security password information by clicking on a link in an e-mail and visiting a website. For more information, visit www.banksafeonline.org.uk.

•  More than half of the population is not yet aware of the extra protection that they can get when shopping online by signing up, when given the option, for a secure online password system offered by Verified by Visa and MasterCard SecureCode

According to Sandra Quinn of Apacs, these latest online fraud losses are comparatively low considering the huge number of transactions now being carried out online: 'Probably nearly everyone with access to the Internet will buy something online this Christmas and there is absolutely no reason why they shouldn't do this in complete confidence providing they follow some very simple rules,' she says. 'If you are going to do one thing this Christmas to help protect your cards from the fraudster even more then sign up to Verified by Visa or MasterCard SecureCode wherever possible when you come across them on an online site,' reccomends Quinn.

•  Only ever use a protected computer with up-to-date anti-virus software and a firewall installed. Visit www.getsafeonline.org for more information.

•  Whenever you are given the option whilst shopping online, sign up to Verified by Visa or MasterCard SecureCode. These are set to increase in availability.

•  Only shop at secure websites with the padlock symbol and https url.

•  Make sure your computer browser is set to the highest level of security notification and monitoring.

•  Always check your bank and credit statements as soon as you receive them. If you find a transaction on your statement that you did not make, contact your bank or card company immediately. Tear up, or preferably shred, any unwanted documents that contain information relating to your financial affairs.

•  If you regularly make transactions over the internet consider opening a separate credit card account specifically for these transactions. This would enable you to monitor transactions at a glance and credit cards offer additional consumer protection should anything go wrong.

•  When shopping online make sure you get a hard copy of both your order form and the retailer's terms and conditions. When buying from overseas remember that it may be difficult to seek redress if problems arise, but having all the relevant information will help your bank or building society take up the case if you have any problems.

•  Keep your cards and card details safe in the 'real' world to avoid them being lost, stolen or copied.

•  Don't give away your PINs or bank passwords to cold callers or in response to unsolicited e-mails - known as phishing scams.

•  Visit the websites www.getsafeonline.org, www.cardwatch.org.uk and www.banksafeonline.org.uk for more information about how to shop and bank safely online.