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How to protect against financial scams


Laine Gordon

By Laine Gordon

4 min read

We’re among the world’s keenest online shoppers, but Australians are still losing millions of dollars every year to dodgy online sellers and scammers.

Data from the Australian Competition and Consumer Commission indicates that Aussies lost $4.1 million in online auction and shopping scams in 2011, up from $3.9 million in 2010.

As more Australians discover the convenience of online shopping it’s more important than ever to be aware of the risks to your credit card and how to protect against them.

How card fraudsters work

In one survey conducted in the United States, a group of 14 credit card fraudsters admitted to using more than 100 different ways of using credit cards to steal money, according to the Australian Crime Commission.

Among those methods identified in Australia are card skimming – where the criminal copies information from a card’s magnetic strip from which counterfeit copies can be made, counterfeit cards, account take over, hacking, online scams and phishing – sending an email to a user that makes false claims in an attempt to trick the cardholder in to revealing information to access their money.

Another common process criminals use to verify the validity of a stolen card data is a method known as “carding”. To do this, criminals will present the card information they have obtained to buy something small on a website that has real-time transactions processes. If the card is processed successfully, the thief knows the card is still good.  

How to protect against it

Despite the risks, around 80 percent of us purchase goods online at least once a month, and 25 percent shop online at least once a week (based on 2011 data) – higher than the US and Europe.

While there’s no absolute safeguard against credit card fraud, by following a few simple precautions you can help to protect yourself online.

Steven Münchenberg, chief executive of the Australian Bankers’ Association (ABA) said shoppers should do their homework before parting with their card details.

“Before proceeding to the online cash register, it’s important that you do some research on the merchant, so that you can be confident that you are transacting with a business you can trust and a business that will protect your personal information, including your credit or debit card details,” he said.

“When buying online, sometimes businesses request large amounts of information they don’t need, so think about limiting the amount of information before providing it. Never send your credit card number by email – emails are not secure.”

The ABA also offers these precautions to card holders:

  • Always be careful to shield your PIN when using an ATM or eftpos terminal. Use a free hand to cover the key pad while you enter your PIN.
  • You should treat your card like it is cash and make sure you never lose sight of it. If possible, don’t give your card to a waiter or shop assistant and let them walk out of your sight.
  • Be vigilant in checking your statements. Always report any unauthorised or suspicious transactions billed to your account and contact your bank immediately, even if the unauthorised transaction is a very small amount.
  • Make it a priority to get your card back after completing a purchase. Sometimes cards are intentionally retained by salespeople in order to later commit fraud.
  • You may wish to lower your card limit, which prevents a criminal spending more than the limit if the card was ever stolen or cloned.

Banks and credit card providers are constantly working to improve credit card security through security measures such as MasterCard SecureCode and Verified by Visa. And when fraud occurs, customers are not liable for losses where it is clear they did not contribute to the loss. For more information contact your provider.

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