The great credit card swindle

AUSTRALIANS lost more than half a billion dollars in credit card fraud last year, and security experts warn that banks are not doing enough to protect customers online and are playing down the problem for fear of harming their reputations.

Last year 383,300 people lost an average of $1600 to credit card fraud, says the Bureau of Statistics, which acknowledges the true figure is much higher.

This is because the bureau's survey into personal fraud - the first of its kind - recorded only an individual's most recent loss, but one-third of victims admitted they had been bilked two or more times.

Further losses were suffered by 124,000 victims of identity theft and 57,800 people defrauded by "phishing" - online scams that collect personal details.

A Herald investigation has found hackers, computer security experts and law enforcement authorities agree that online crimes involving credit cards and other transactions are easy to commit, hard to track and that criminals quickly circumvent new security measures.

In spite of this, bank customers are given little information about the severity of the problem.

Between 2006 and 2007 the dollar value of fraudulent credit card transactions grew by 30 per cent and the volume of illegal transactions climbed by 35 per cent, says the Australian Payments Clearing Association, which collects statistics from the nation's financial institutions.

While its figures show progress against activities such as cheque fraud, credit cards are the biggest and fastest-growing area of fraud, especially within online use.

Finance and computer experts say the growth is the result of banks inadequately protecting consumers.

"To encourage customers to get into online banking, the banks and online merchants downplayed the risks of fraud," said Andrew Wallis, an analyst at the independent research company Gartner.

"It's a classic thing. How do you get people moving into something? Well, you don't tell them it's dangerous. You don't mention the negative side. You'll extol the virtues and the benefits."

The benefits are clear - fewer tellers for banks and greater convenience for customers - but the dangers are complex.

"Realistically, the vast majority of people are never going to become computer security experts," Mr Wallis said. "It's the banks' responsibility to do everything they can to protect the customer."

Steve Lewis, of the security software vendor VeCommerce, said: "I talk to some of the chief security risk officers in the banks. You don't hear much about it in the media but, once you're in there having a quiet chat, you learn there is a lot going on, a lot that is not talked about."

News Source : http://www.smh.com.au/