Credit Cards

Tips, news, reviews, caveats, trends, updates and analysis related to consumer and business credit cards, and prepaid debit cards. From the interest rate specialists @

Sunday, January 12, 2014

Credit-Card Fraud, Xmas Shopping Seasons 2013

Target card swipe machine
Target card swipe machine
40 million was the initial estimate of Target customer card accounts accessed by scammers.

Now the estimate has been raised to 110 million!


I used to shop at Target many years ago.  It's been at least 4 years since I've been in a Target store.

But this news still makes me a bit nervous, because I have no idea how long Target keeps credit card info in their databases.

Most of my cards have new numbers now, but who knows.  These scam artists are scum, but they are not stupid.   

Back in 2008, I treated a new friend to lunch at Red Lobster.

I paid the bill with my Chase debit card, a card that's linked to my business checking account.

As is the custom in the USA, the waitress took my card, disappeared with it, then returned to my table for a signature.  She was acting a bit strange; shifting eyes and somewhat hurried, but I thought nothing of it.

And that was the first time I've ever been a victim of a credit-card scam.

That waitress used one of the widely available, and very portable, card readers, to get my digits.

I got my money back, after faxing a reasonably simple, but still annoying, form.

But the incident was a real wake up call for me.  Using the debit card attached to my business checking account for such transaction was something I would never do again, I pledged to myself.  Way too risky!

Now here's a very interesting difference between Europe and America: when you're ready to pay your restaurant bill with a credit or debit card, the server will bring the credit card terminal to your table!  Your card never leaves your line of sight.

         And that's the way it should be.

Europeans are also ahead of the game with their adoption of smart cards.  Comparing magnetic strip payment cards to smart chip cards is like comparing audio cassette tapes to a digital music player full of MP3's.

Neiman Marcus
Neiman Marcus
American credit-card banks have been resisting the smart card thing, which really doesn't make sense to me.  Surely the cost of upgrading is less than the cost of dealing with payment-card fraud!

Fast forward to today: luxury retailer Neiman Marcus reports a serious payment-card related breach.  All this card fraud seems to be focused on the 2013 Xmas shopping season.

Credit-card rewards be damned!  I think paying with cash will be king for many months to come...

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Tuesday, August 26, 2008

Twice The Victim of Fraud, In As Many Weeks

credit card fraudWhen it comes to my credit and debit cards, I'm very paranoid. I check my accounts daily; I scan for any charges I didn't make (I love Internet banking.) I've never been a victim of credit card fraud, until recently.

Last month, I noticed a charge on my Chase debit card for flowers which I never ordered. The charge was over $100 and the purchase was made at an online florist in Europe. As soon as I noticed the charge, I got on the phone with Chase to report it. I assumed that this type of claim was routine for a big bank like Chase; I also assumed that the process would be efficient and hassle-free. I was disappointed to learn that Chase would need to email me a claim form which I would have to fill out and fax back to Chase. Thankfully, the claim form was one page and it only took me a minute to complete, but I was still disappointed. Why was I being forced to use an inefficient technology that was hot back in the 1980's to make this claim? Why didn't Chase have a secure webpage I could visit to file my claim online?

Chase needed my signature on the form and that's why I needed to fax it. OK, I can understand that. Form completed, I scanned the document then fired up my fax software (Symantec's Winfax 10.0) and initiated the send. At the end of the send, Winfax indicated that the fax was successful, but it also returned an "unable to communicate with modem" error. I'd seen this error many times before and it never caused any problems, so I ignored it.

According to the instructions on the claim form, Chase would credit me the full amount of the disputed charge as soon as they received my signed claim form. Two business days passed and I still did not see a credit for the disputed amount in my account. I called Chase to ask them why they hadn't credited my account. They told me that they hadn't received my fax. I became irate at this point and demanded to speak to a supervisor. After waiting a few minutes, a supervisor came onto the line and told me that he had investigated my situation. He said that Chase had received my fax, but the portion of the document that contained the signature line was not transmitted, so the claim was not processed. Assuming that the error was their fault, I gave this guy a bit of a hard time, demanding that they process my claim immediately. He assured me that the problem was at my end and asked me to resend the fax. After taking a deep breath, I acquiesced.

I sent the fax two more times, and Winfax returned the same communication error despite simultaneously indicating that the fax was sent successfully. OK, so the problem could be my good old reliable Winfax 10.0. I really like Winfax, and you know how it is when you're in love: the object of your affection can't do wrong.

I conducted a quick Yahoo! search for "send fax free" and found Never used it before; never heard of it. FaxZero is free, intuitive and fast. The site is supported by ads. You can use the site to send and receive, though there are some restrictions if you choose not to pay anything. A few hours after I used FaxZero to send my claim form, I saw a credit in my Chase account for the disputed amount.

OK, so Chase wasn't at fault. It was stupid Winfax. The software had all the latest updates installed. Symantec wanted me to pay money to upgrade to a newer version of Winfax to get rid of this problem. No way, José. The software should not be telling me that a fax was sent successfully when in fact it wasn't. I deserved a free upgrade, but I wasn't going to get one. Bye-bye Winfax.

How was my account compromised? I have no idea. I use my debit card in both the online and offline worlds. Needless to say, I've modified the way I use my cards. Chase mailed me a new debit card within 3 business days of my initial phone call about the crime.

Two Weeks Later, My Chase Credit Card Is Compromised!

OK, so a little less than two weeks later, I get a call from Chase. They are calling to let me know that they detected a suspicious authorization on my Chase credit card. The charge was for less than $4, and the transaction was never captured.

Authorizing is when a merchant uses a credit card machine or software to tell your bank to set aside a certain amount against your account for a purchase. The merchant can then "capture" the charge later in the day in a batch process. Capturing is when the merchant tells the bank to process the authorized amount and complete the transaction. A merchant can authorize first then capture later, or the merchant can opt to do both at the same time. The merchant gets paid in step 3 of the credit card purchase process, when the transaction is "settled."

The 3 step process is all about security.

The folks at Chase have software that calculates the likelihood that a charge is legit, based on a cardholder's location, spending habits and other criteria. Red flags went up for this particular charge so Chase called me to ask if the charge was made by me. It was not. The Chase rep explained that criminals will often authorize a small amount first before attempting to rip off an account for a much larger amount.

The Chase rep told me that my credit card account number was no longer valid, and that I should destroy my credit card right away. A new card would be shipped to me within 5 business days. I explained to the rep that I had some important payments to make and I really wanted to use this particular Chase credit card (I'm in the middle of a 0% intro APR deal with this card, but I didn't tell that to the Chase rep.) She understood and offered to rush my replacement card to me; I would receive it within 2 days. I asked if I would be charged for the rush delivery and she said no, so -- a real no-brainer here -- I accepted the offer. Replacement card was delivered 2 days later, as promised.

Banks tend to be very frugal about things, so I was impressed that I was able to get my card in a hurry without being charged extra for the shipping upgrade. Kudos to Chase. I would expect the same from American Express, as they tend to go the extra mile to make sure that their customers are satisfied. I've read and heard good things about Discover as well, though I can't comment on the company since I've never had a Discover credit card account.

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