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JOURNALS & WRITTEN by Fred Kohx >             

Executive Founding Member for WANTED SA >

Wednesday January 05, 2011 >

WANTED SA has received from our offices in British Columbia, Canada, the following news report; Credit or Debit Card? Millions of Canadians and people around the world make that payment decision every day without considering the inherent risks involved in the choice.

While most consumers are familiar with the consequences of having their credit-card information lost or stolen, Bruce Cran of Canada says far too few are aware of the dangers of debit-card fraud.

“There seems to be an aggressive amount of [debit-card fraud] and we’re getting calls on it, a lot of calls,” the president of the Consumers Association of Canada said in an interview, noting that many of the complaints his group receives are from people who have had their accounts compromised without their cards ever being out of their possession. “That could be due to all sorts of things, but it is on the increase.”

The numbers confirm that debit-card fraud is an increasingly common problem for Canadians. Between 2008 and 2009, the number of debit-card transactions in Canada increased 5.4% from 3.7 billion to 3.9 billion. During the same period, the dollar amount lost to debit-card fraud increased 36.2% from $104.5-million to $142.3-million and the number of cardholders who had to be reimbursed increased 60.8% from 148,000 to 238,000.

While that amount of money is still less than half of the $358-million taken from 541,580 Canadian credit-card accounts in 2009, Mr. Cran contends being the victim of just $100 of debit-card fraud can be far more problematic than being defrauded of several thousand dollars from a credit card.

“Most of the complaints we get these days are easily resolved with credit cards,” he said. “They are generally fixed up very fast and you don’t have to go through the process of waiting for money to be put back into your account, whereas with the debit card quite often there is a series of issues.”

In addition to taking up to several weeks to receive a new card, Mr. Cran points out that many banks will freeze access to a compromised account until they are satisfied that the cardholder in question is not somehow involved in the fraud.

“A lot of us are forced to live pay cheque to pay cheque, and that is a lot of money to be without for three or four weeks,” he said.

One technological solution that appears to successfully deter debit fraudsters has been the introduction of EMV ‘chip’ cards, which carry a unique service code designed to ensure that only the authorized cardholder is the one making any transactions. Mark Sullivan, director of fraud programs for Interac Canada and a former Scotland Yard detective, says the introduction of chip cards in the past few years has led to an 80% global reduction in debit-card fraud.

“It is literally an allowance to do the transaction, a way of making sure the transaction moves forward properly,” Mr. Sullivan said. “And from a protection point of view it goes through a very complex and complicated system with detection that is attached [throughout].”

He estimates that approximately 65% of Canadian debit cards have been replaced with ‘chip’ cards since the industry started moving to the EMV standard in 2005. Mr. Cran agrees the chip cards are an effective combatant against debit fraud, though only for the 65% or so of Canadians who have them.

“The figure of 70% [chip-card adoption] was actually quoted to me earlier in the year so I don’t know when they’re going to get around to making it 100%. Theoretically that shouldn’t be very difficult,” he said.

Kelly Hechler, a spokeswoman for TD Canada Trust, said nearly 100% of its customers who regularly make debit-card transactions have had their cards replaced and that TD’s automatic teller machines (ATMs) have been converted to use EMV chip technology. The other four major Canadian banks did not respond to a request for comment.

But even if every single Canadian debit cardholder had the latest chip-and-PIN security on their cards, that is still no guarantee of complete protection. Last February, researchers at the University of Cambridge in the U.K. demonstrated how criminals are able to access accounts connected with stolen EMV debit cards without having to know the correct PIN. Because the simple “wedge” method used by the fraudsters allows them to input any PIN and have the ATM verify the number as correct, victims of this crime are often denied reimbursement of their stolen funds as banks argue the customer was negligent by allowing the criminal to gain access to their PIN; even if the criminal never had such access.

“The banks often tell customers that their PIN was used and so it’s their fault,” Ross Anderson, professor of security engineering at Cambridge and one of the authors of the report, said in a release. “Yet we’ve shown that it’s easy to use a card without knowing the pin — and the receipt will say the transaction was ‘verified by pin’ even though it wasn’t.”

Which brings up another major part of the problem: regulation; or, in the case of debit cards, lack thereof. Credit-card issuers have to follow strict governmental guidelines to ensure cardholders are not held liable when their accounts are defrauded, while the desire to provide good customer service is the only thing motivating the issuers of debit cards to offer what Mr. Sullivan calls “zero liability protection” on their service.

“If you are responsible for the fraud, or for just making it easier for someone to steal your money, the issuers of debit cards are not going to bend over backwards to help you,” he said.

While Mr. Sullivan is steadfast in his assertion that debit users are never held liable for being defrauded, Mr. Cran claims that even something as simple as writing down your PIN number, leaving it in your wallet and having your wallet stolen can make a cardholder liable for any theft of funds.

Some might argue that leaving a PIN number on or near a debit card is negligent to the point of asking to be victimized, though it nonetheless “happens more than you think,” Mr. Cran said.

“As you get older it gets harder to remember numbers than it once was and people do tend to write [PINs] down in some fashion,” he said.

“I think Interac cards need to get to the stage where we’ve got protection equal to the credit card structure.”

Until that happens, Canadian debit-card users need to mitigate the risk themselves by checking their financial statements regularly and ensuring their PIN numbers remain a closely guarded secret.

Another form of Card which has proven to be more fraud proof are the Hi Tech Prepaid Cards in which a card holder can monitor their statement from either a computer or a cell telephone more effectively. Most major banks now issue Pre Paid Cards as an added feature of their financial institutions.

WANTED SA thanks to all the News Agencies in Russia, WANTES SA Agents in Russia, IP Providers, Hosting Firms who contributed to this report and all the Parties, Press, Law Enforcement and Securities forces who have contributed to this article and their sincere opinions and statements.

WANTED SA states that the facts and opinions stated in this article are those of the author and not those of WANTED SA. We do not warrant the accuracy of any of the facts and opinions stated in this article nor do we endorse them or accept any form of responsibility for the articles.