Taking credit, Philippine card fraud on the rise
While credit spending leapt by 7.5% last year, many of the 7.4 million Filipinos parading their plastic remain oblivious to the dangers of a misplaced card. President Gloria Macapagal-Arroyo herself previously described credit card fraud as a kind of ‘economic sabotage’ that tarnishes the country’s name before the global community.
Palmer Mallari, executive officer of the National Bureau of Investigation’s (NBI) Anti-Fraud and Computer Crimes Division (AFCCD), says there are three ways to go about the crime: the simplest is theft, when the card is intercepted in the mail or swiped off an unsuspecting victim. But tech-savvy fraudsters now resort to small skimming devices--often attached to the store’s payment terminal--that record card information, enabling the scammer to clone one’s account. Online hackers can also use spyware to canvass information or infiltrate merchant websites.
Though debit is still the preferred mode of spending among Filipinos--only 7.7% of the population use plastic money, compared to the 32.6% who wield debit cards--this hasn't stopped cybercrime from flourishing in the country. Skimming accounted for 40% of all fraud cases in 2007, while card-not-present (CNP) fraud, which occurs in fax, phone or online transactions where neither issuing bank nor cardholder is present, comprised around 20% of the reported incidents.
The Republic Act 8484 or the Access Device Regulation Act of 1998 commands cardholders to quickly report the loss of a card to their issuer to avoid being billed for the fraudulent transactions. If undue purchases have been made before the card is blocked, the former may have to submit an affidavit of loss to his issuer, but it may take months of investigation before the charges can be cleared from his records.
Another timely legislation, the Republic Act 8792, known as the E-Commerce Law, was implemented in the wake of the Love Bug Virus in 2000. It can slap up to P100,000 in penalties and a maximum jail time of 20 years to those found guilty of online piracy offenses.
By way of global e-commerce sites and generator programs, hackers have been able to download scores of credit card access codes, which they exploit to go on online spending sprees or peddle the information to other parties. Since the law was enacted, the NBI says it has received a steady flow of complaints from online merchants who've had their share of run-ins with codebreaking criminals.
A number of credit card companies have put up their own safeguards to protect their clients from these schemes, such as having an agent call the cardholder to confirm a big ticket purchase before the bank approves it.
But industry groups like the Credit Card Association of the Philippines (CCAP) are lobbying for stricter legislation that can keep up with the high-tech times. On the banks' corner, the much-anticipated launch of the EMV chip technology in Asia has dealt fraud operations a hard blow with its superior security capacity, but it may take a while for local merchants to update their payment terminals with machines that can read the EMV.
Already the norm in European regions, the chip-based card offers consumer protection beyond that of the traditional magnetic strip, if only because it’s too expensive for con syndicates to duplicate.
To avert fraud, issuers print cautionary messages on the card’s pack flaps before it’s delivered. But counterfeiters aren't the only ones giving cardholders grief. Last year, Bangko Sentral ng Pilipinas (BSP) issued Circular No. 454: the brief addressed rising reports of shady collection practices, decrying the use of obscene language, false representation, threats of violence and other forms of harassment disguised as persuasive strategies--all of which are against the law. While they are rightly entitled to payment, these financial institutions are still expected to exercise good faith in the cardholders they picked.
By Victoria T. Vizcarra
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