Keep your money safe over the silly season

Beware the risks of credit card fraud, particularly if you plan to shop online this Christmas.

A colleague of mine had an interesting experience this week. She received both an email and SMS from her credit card provider saying her card had been blocked due to fraudulent activity. It was an unnerving incident, and a timely reminder that none of us can assume “it won’t happen to me”.

In this particular instance, a dodgy offshore company had tried to make a transaction for $0.08 using my workmate’s card. Apparently this is quite common. Fraudsters often try out a very small or even zero dollar transaction to test the waters and see if the card is active. If all goes well, they can go on to make far bigger purchases using your card details.

Fortunately, in this case the card issuer’s fraud system recognised the bogus transaction and instantly blocked the card. However not everyone is so lucky.

A recent report from the Australian Payments Clearing Association shows credit card fraud is on the rise. Chip technology and mandatory use of PINs is making it much harder to steal data at the terminal. But it’s a different story for “card-not-present” (CNP) transactions where shoppers hand over their card details online, by phone or by post.

In 2015, CNP fraud accounted for $363 million stolen by crooks – a good chunk of the total $461 million lost to card fraud. Over 60% of these dodgy transactions were made offshore.

It’s worth noting that fraud impacts just 0.03% of the seven billion card transactions made in Australia each year. Nevertheless, as we head towards the festive season Australians will be ramping up their shopping activity, with many choosing to shop online. So it’s worth being mindful of the need to keep your money safe during the Christmas rush. Taking a few simple steps can help to protect against fraud.

First and foremost, stick with reputable online retailers, and look for the padlock symbol in the URL bar indicating a secure website.

Equally important, make a point of monitoring the activity on your card. Online and mobile banking make it possible to check credit card transactions regularly without the need to wait for monthly statements.

If you come across a transaction that looks unfamiliar, contact your card issuer. Bear in mind some retail outlets are run by private companies with a different name to the store brand. However if the date or dollar value of a transaction looks odd, it’s better to be safe than sorry by speaking with the card provider. The sooner you take action, the sooner your card can be blocked to prevent crooks dipping into it further.

Paul Clitheroe is a founding director of financial planning firm ipac, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.

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