Credit card fraud perpetrated upon US Credit Card holders stands at 47% of the world’s credit and debit card fraud according to the highly respected Nilson Report. That high statistic translates into a mind-boggling 3.56 billion dollars of fraud losses in the United States last year.

Why, in one of the world’s leading industrial countries, is this loss so great? And what can American cardholders do to protect themselves?

The amount of fraud loss in the US is not directly proportional to the amount of credit card spending; although we are definitely a nation of consumers, we only generate 27% of purchases and cash.

Nilson Report Publisher, David Robertson, states there are two reasons card fraud is so high in the United States. “U.S. banks have been slow to adopt newer technologies such as EMV chip cards, and issuers are reluctant to decline card authorization from merchants because they don’t want to alienate their cardholder.”

EMV technology is widely used in Europe and other parts of the world and provides more protection to the card holder. Cards with EMV technology have a chip embedded that is essentially a microprocessor, a small type of computer. These chips can store more information that the magnetic strip on the back of cards issued by US banks and they also have stronger security.

Cards with magnetic strips can easily be skimmed with a handheld, portable device as was done in the recently discovered NYC restaurants credit card fraud ring. The stolen information can then be placed on another magnetic strip to create a fraudulent card. With a using the EMV chip, built in cryptographic algorithms that change with each use are present so it is not possible to skim the card and use the information gleaned for online purchases. EMV cards also have built in data authentication that prevents fraudulent card replication. The EMV chip has PIN capability so if the card leaves the customer’s hand, gets lost, or gets stolen, the card cannot be used.

Banks in the US have obviously been slow to move toward EMV technology. Speculators assume the reasons why US banks have dragged their feet could involve the expense of the change both for the card issuers and also for the retailers accepting credit cards as current card readers would all have to be replaced. However, some speculation has also pointed in the same direction as Robertson’s second assertion, that card issuers are hesitant to alienate their customers.

Driven by the need or desire to satisfy stock holders and increase the profit margin and very aware of America’s free market system allowing competition, card issuers seek to keep their customers happy so the customer will continue to use that issuer’s credit card. The Nilson Report states that the average American carries at least 4 credit cards. This means that not only if a card issuer tightens up on purchase approvals, but also if the card issuer moves to a new technology and retailers are slow to upgrade their equipment, cardholders may too readily resort to using a competitor’s card because it is more convenient even if it is also more at risk for potential fraud.

As consumers, we can help bring about change to a more secure technology if we voice our opinions both to our card issuers and to the merchants with whom we regularly do business. Let your credit card issuer know that you support being on the cutting edge with a move to EMV technology. LIkewise, communicate with store owners or managers that you would support a changeover to equipment allowing use of EMV chip cards. Both want your business, and if enough people voice their opinions, change will happen.

In the meantime, consumers can take steps to protect themselves from credit card fraud by doing the following:

• Keep a hard copy of all credit card information.
• Use credit cards, not cash or debit cards.
• Limit the number of credit cards you carry.
• Use only one credit card for making online purchases.
• When making purchases with a credit card, never let the card leave your sight.
• Inspect ATM’s, gas pumps, and other machines designed to scan your card before completing a transaction.

Listening to a steady stream of advice flowing from my grandmother’s lips during the entirety of my growing up years, you’d have thought she published the world’s largest collections of “Maxims to Live By.” Of course, if the world had listened to and followed her wise counsel contained in such memorable statements as “Neither a borrower nor a lender be,” I wouldn’t be writing this blog.

Because I enjoy the convenience of credit and debit cards, or perhaps because avoiding credit wasn’t a “lesson I learned early and harmlessly,” I have to face the fact that having my credit card or my credit card number stolen is a very real possibility as it is for anyone who carries credit cards. I’m not exempt just because I write this blog. However, knowing “an ounce of prevention is worth a pound of cure,” there are steps both you and I can take prior to having cards stolen that will help if that event ever takes place.

First, carry a minimum number of cards in your wallet and never carry a social security card.

Second, it’s recommended that you keep a photocopy of both sides of every card you own. This file of paperwork should be kept in a safe place separate from where you keep your credit cards. If an actual photocopy of every card seems like too much paper to keep track of, you could instead keep a one-page listing of the pertinent information. This list would include the name of the institution issuing your credit card, your credit card account number, and the phone number to call to report a lost or stolen card. This list needs to be on a hard-copy, paper format. (If you keep such a list of information stored on your computer, caution needs to be taken in doing so…but that’s another blog entry.)

When it comes to stolen credit or debit cards, “timing is everything.” A quick response to the situation is your best protection.

If the worst happens and your wallet is stolen, you immediately need to use your list to phone the companies that issued your stolen credit cards to report them as stolen. Timing is essential here. The Fair Credit Billing Act (FBCA) limits your liability to $50 on a credit card reported as stolen. The Electronic Funds Transfer Act (EFTA) limits the amount of your liability on fraudulent transfers or ATM withdrawals based on how quickly you report the ATM/debit card as stolen. If the loss is reported within 48 hours, your liability is only $50, but if the time period is more than 2 business days, you could be liable for up to $500. If you neglect to report unauthorized use of your ATM/debit card within 60 days of the bank statement showing the unauthorized access, you will be liable for the entire loss.

In dealing with stolen credit cards, it is best to document in writing everything that is done. Record the date and time of your phone calls to the credit card issuers. Be sure to record the name and ID # of the representative handling your report. Take notes on your phone call. After completing the rest of the steps necessary in dealing with the theft of your credit cards and wallet, summarize the content of your phone call in a written letter to the credit card company. Keep a copy of each of the letters you sent, and perhaps consider mailing the letters return receipt or signature confirmation. The point is to create a paper trail that documents your actions just in case anything comes up for dispute at a later time.

After reporting the stolen cards to the issuing company, file a report with your local police (or, if you are away from home, with the police where the theft took place).

Be sure to contact each of the national credit reporting agencies by phone. Report your stolen credit cards and request a credit freeze be put on your account. You will create a password that must be used to remove the freeze. If your identity has been stolen, this service will be free. Otherwise, each credit agency will assess a small fee both to initiate and to remove the freeze. Again, it is wise to document these phone calls and mail a follow-up letter summarizing the requested action to each of the credit reporting agencies.

Contact your state’s department of motor vehicles to report your license as stolen and obtain a new license. Be sure the license number is different from the number on the stolen license. Contacting the social security office is essential if you broke the rules and carried your social security card or number in your wallet. In this age of identity theft, it might be wise to speak with one of their representatives about the loss of your wallet even if you didn’t have your social security card tucked inside.

Once the immediate, initial wave of contacts reporting the loss of your credit or debit cards has been made, you should keep a vigilant watch on your bank statements, credit card statements, and other bills. If there is any unauthorized activity, report it immediately.

Being prepared and acting quickly will ensure you minimize your loss in the event of stolen cards. Like grandma always said, “Wise people are diligent.”

Seems like daily there are news reports concerning yet another case of identity theft or credit card fraud. Who are the typical victims? Are they the nice elderly couple down the street who are so trusting and big-hearted? Or perhaps the high school and college-age kids who believe they are invincible as they step out to conquer the world and make a place for themselves? Surely it isn’t the savvy white-collar business man who drives his Lexus by the house everyday on his way to work.

The truth is, none of us is exempt from the all-too-real threat of potential credit card fraud, which is a big part of identity theft. In reality, no one can guarantee that your credit card numbers won’t be stolen or that your identity won’t be accessed by a criminal. However, there are several pro-active measures we can take that will reduce our risk ratio.

I have a friend who is a general contractor. He has encountered many, many remodel projects that were  initiated because of a minor problem that wasn’t recognized and dealt with early with just a simple repair. Often the problem itself could have been prevented if, in the original construction process, protocol had been followed and shortcuts had been avoided. After listening to him tell of an incident where he had been called to make what the home-owner thought would be a minor repair but that turned out to be quite a restoration project, I asked him how he discovered the source and extent of the actual damage not readily noticeable to the average person. His response intrigued me and has become a bit of a guiding principle in my life: “You have to think like water.”

The lessons I learned from my friend the contractor are principles I have applied to protect myself and my family from credit card theft. Principle one: Follow protocol. Principle two: Don’t take shortcuts – ever. Principle three: Think like a thief.

When I was young, my grandparents traveled in Europe. The only thing they really had to worry about was preventing the actual physical theft of their cash and traveler’s checks. My grandfather bought a money belt to wear under his clothing and religiously carried their money and checks in it. He knew the high rate of pick-pocket crimes in the area they were visiting and had friends who advised him that a money-belt was the safest way to go. My grandfather applied all three principles.

Today’s world is a bit more complicated than that of my grandparents, but there are still proven protocols we can use to protect ourselves from credit card fraud in today’s high-tech world. Obviously, we still need to be sure our cards are not physically stolen. It’s a wise idea to only carry a couple credit cards and an ATM card in your wallet. If you can force yourself not to, don’t carry a debit card. Debit cards are so convenient to use, but carry a much greater risk than a credit card. Generally, if a credit card is stolen, the Truth in Lending Act protects credit card holders from being liable for no more than $50 of the loss. Debit card carriers whose cards are stolen are at risk of having their entire checking accounts wiped out, and they have no protection. (If you use debit cards, access the card company’s on-line service to monitor your account weekly.)

The second thing we can do to protect physical access to credit card numbers is to buy a paper shredder and faithfully shred everything with any personal information. Everything. Every time. No shortcuts. A list of items to shred would include credit card statements, credit card applications, loan applications, pre-approved credit offers, credit card receipts, etc. In addition to shredding paperwork you are disposing of, spend the extra money to install a mailbox with a lock or contract for a PO Box to protect the paperwork you are receiving. Locked mailboxes aren’t fool-proof, but they are a deterrent.

The electronic age has presented many more threats to my credit card safety than my grandparents ever dreamed of. Awareness and diligence is a key to protection. Anytime your credit card leaves your hand, don’t let it leave your sight, and watch carefully the way the waiter or the retail cashier swipes the card. Hand-held devices called skimmers are used by criminals to store information found on a credit card’s magnetic stripe until a time when the criminal can download it onto a computer. It would only take a second to swipe the card with a skimmer before swiping it for your purchase.

One of the biggest targets for criminals intent on credit card theft is your personal computer. It is imperative that you install a firewall to protect your home computer from hackers. This is especially necessary if your internet connection is through DSL or cable. While you are installing a firewall, also spend the money for a good virus protection software and pay the subscription fees for regular updates. This protection will prevent worms or viruses from capturing information entered onto your computer and sending it out.

If you store files that contain sensitive personal data including credit card information, bank account numbers, investment information, or passwords, protect those files with passwords.

Criminals target naïve people. Keep yourself educated on recent scams involving the internet. Be assured that banks and credit card companies never, ever, ever contact customers through emails that ask for identifying information or account numbers. “Phishing” emails will contain your bank’s logo and other graphics and look like official correspondence. They will direct you click on a link that opens a page very similar to the bank’s online website where you will be asked to enter account information. Do not click on the link. Do not enter your information. Ever. If you have questions, call your banking institution or your credit card issuer.

In the same vein, do not give out your credit card information or any other identifying information (debit card, social security number, etc.) to anyone else soliciting it over the internet (or phone or mail) unless it is to a business you trust and unless you have made the initial contact with the company.

Be cautious about your online shopping. Only purchase things with a credit card online if you are positive that the reputable business is offering a secure transaction site. When you hit a “checkout” or similar button, you should be taken to a page that has a prominent graphic or dialogue box containing a notification of security. You can also glance at the url in your browser to see that the address begins with https:// – look for the “s.” You should never email your credit card information to anyone. Email can be hacked into. If a company does not have a secure site through which to complete a transaction, use PayPal or find another source for the item you wish to purchase.

Beware of your children’s internet activities. Protect your computer from being able to download programs without password-approved permission (and don’t give your kids the password). There are many file-swapping or file-sharing programs on the internet that can be interesting or fun, but they are easy ways to expose yourself to hackers.

If we are as diligent about protecting our credit card numbers and personal information as thieves are about stealing it, if we follow established protocol and never take shortcuts or make exceptions to the rules, we can go a long way in reducing our personal risk of credit card fraud and identity theft.

People don’t realize how important it is to protect their identity. Identity theft is just as common as having personal property stolen. You need to protect your identity as much, if not more, than you need to protect your property. Many people don’t take necessary precautions because they don’t quite understand exactly what identity theft is.

Your identity is much more than you might think. It is more than a social security number. It is more than passwords and pin numbers. It is more than your credit card number. Your identity is absolutely everything about you. It is where you went to high school and college. It is your favorite color, song and food. Your identity is the complete sum of every bit of information every recorded about you, and even information not recorded.

You need to understand identity damage, along with identity theft. Identity damage could be anything that is wrong on your credit report. This damage may be small, but it can be costly. The smallest mistake on your credit could mean that you’ve been paying a higher mortgage, car payment, or that you couldn’t get the loan you wanted. Watch your credit report carefully and make sure you report any mistakes immediately.

There are several warning signs that you should watch for when trying to protect your identity. These signs include:

• Your credit card/bank statement doesn’t come

• You know you have good credit, but you are denied for a loan.

• You get a bill from a company you don’t recognize

• A credit collection agency contacts you and you are certain you are not late on any payments.

You need to know and understand these warning signs and be prepared to take necessary precaution measures to protect your identity. Don’t carry your birth certificate, social security card, or passport. Don’t write anything extra on a credit card receipt (phone number, address, etc). Never write your social security number on a check or bank deposit slip. Do not give out personal information over the phone. Shred all important documents or anything with personal information on it.

You can never be too cautious when trying to protect your identity. Your identity is one of the most precious and fragile things you own. Remember, you do own your identity and you need to protect it in any way you can. Make sure you check your credit report at least once a year so you can catch identity theft or identity damage as soon as possible.