Credit card fraud keeps growing on the Net

To understand the world of credit card fraud, you must first learn an entirely new language. Words like "skimming," "shoulder surfing" and "phishing" may sound less criminal than "stealing," but they are, in fact, ways in which money can be stolen off your credit card.
And though there are no definitive global figures on losses from credit card fraud - most financial institutions are tight-lipped on the subject - an FBI report from 2005 indicated that credit cards represented the majority of the total $315 billion U.S. financial fraud loss for that year, while a recent European study found that more than 22 million adults fell victim to credit card scams in 2006. Figures from the Banque de France, the country's central bank, showed a credit card fraud loss of €236 million, or $319 million, for 2005.
Equally disturbing are crimes affecting online banking, which until recently, because of security concerns, was the fastest growing activity on the Internet, with three-quarters of Europeans banking online and 38 percent of U.S. adults.
"There were zero online banking fraud losses in 2003 in the U.K," Smith said. In 2006, £33.5 million, or $66.4 million, was lost. A U.S. survey by the market research group Gartner in 2004, the latest figures available, reported that nearly two million Americans had their checking accounts raided with an average loss of $1,200 per incident, or total losses of more than $2 billion for the year. Most incidents were attributed to online banking.
"The numbers are, quite frankly, staggering," said Francis Ravez, secretary general of the European Security Transport Association, a nonprofit organization that represents cash-industry logistics businesses, which conducted the credit card study in Europe. "The cost of fraud is enormous, and it is only going to get worse if proper security is not put in place."
The latest figures from Apacs, the British trade body that represents payment institutions like banks and card issuers, reveals exactly how deceptive crooks have become in executing "card-not-present," or CNP fraud - purchases by phone, the Internet or via mail order.
Although overall credit card fraud in Britain fell by 3 percent from 2005 to 2006, to £428 million, CNP fraud increased by 16 percent in 2006 to £212.6 million - almost half of all plastic losses due to fraud. The decrease in overall fraud is entirely due to the introduction of a security measure in 2006 called "Chip and Pin," which requires cardholders to identify themselves at the point of sale through a personal identification number, or PIN.
"The increase in Internet fraud could be expected when you look at how many more businesses are accepting online transactions," said Jemma Smith, a spokeswoman for Apacs. Twenty-five million people in Britain alone now shop online, she said. "The problem is that the criminals are targeting the customers more than the technology. It is not about hacking into computers as much as it is about tricking users into revealing their card or account details.
"That is why opening an unsolicited e-mail is like opening the front door of your home to a stranger," Smith said.
As far as banks and credit card companies are concerned, online theft is the same as its equivalent in the physical world: If someone steals your card information, the bank or card issuer will normally cover most or all of unauthorized charges. That is why many card issuers are putting new security measures in place. "Verified by Visa" is a free service where your purchases are protected with participating online merchants by a password, as is MasterCard's new SecureCode service.
Card companies are hoping the extra layer of security will reduce some of the more popular types of identity theft, both online and off, that fraudsters are now employing:
Skimming describes the process in which a device is used to copy the magnetic stripe encoding off of a card - one reason card holders are cautioned against using ATM machines that look unusual.