
My Visa has been cloned!
This is easy to do.
A lot of people think that access to their credit information is so secure. And they are so wrong.
I must say, first of all, that Visa did do a really good job of catching the thing immediately. There were several charges that had been attempted that I was informed of but all of them, including the very first one were denied and the card was frozen. I don't know how they figured it out on the very first one but they got it right away.
Credit card fraud is nothing like it used to be where someone would steal your card and try to use it right away as many times as possible before you noticed and canceled it and then in some cases they might even be able to apprehend the person right there on the spot as they tried to use it (that was a rare case but at least the idea was that the person had to use it in person somewhere and do it quickly).
It's not even like in the days where they would clone your number and try to get away with using it attached to a dummy card until the number was cancelled (although they still do that).
Nowadays almost all debit and credit activity is outsourced to processing companies.
So you swipe your card in a store and 90% of the time your credit information is not retained in the store at all but goes to a processing company and the store can't even access it.
That's right, all of your payment information goes to a third party processor that you don't know and that doesn't know you. That company gets the money from your bank and then sends it to the merchant you purchased from.
Some of these companies are in Canada but usually they are in the US or overseas.
So this gives you the illusion of security that no one in the store has access to your credit or debit information as well as your card itself (unless of course they have a photographic memory... when those people decide they're going to scam you there's nothing you can do).
However this is nothing more than an illusion of security because what actually happens is that all of your information is passed to an anonymous stranger, likely in the US. You have never met them and never will and they have never met you and never will. You are just a credit card number and a credit limit to them. Do you think they're going to feel bad about stealing your number?
So basically all of your info is in hands of a bunch of strangers in some far away office and you don't know who they are, where they are, and chances are you'll never even know the name of their organization.
It's basically a call centre. You know, the kind of place that opens in one state for a few months and then lays everyone off and moves to another state a few months later when the neighboring state lowers its tax rate. These are people with McJobs, who would be just as happy or unhappy working at any other low-paying job. They aren't friendly models in suits sitting at a desk and smiling the way Visa employees are portrayed on TV. Your transacations aren't handled by professional bank employees. They aren't even handled by a bank.
What's more if you contest a charge from a store here's what happens:
-You see your bill for $159 has been double-charged to your account.
-You go to your bank and they tell you they can't do anything, tell it to the store you made the purchase at.
-You go to the store and explain it to them and they apologize and say they'll get it fixed. And they mean it.
-They pass it to their head office because there's nothing the store can do about it. They have no record of your payment information because it's all with the subcontractor. For your security.
-The head office calls up the credit-card-processing subcontractor and the subcontractor says "It wasn't us. Our records are clear. It was you."
-The head office says "Our records our clear. It wasn't us. It was you."
-The subcontractor says "Nope. You'd better tell the customer to contact their bank."
-The head office tells the store to call the customer and tell them to call their bank.
-The people at the store roll their eyes and tell the head office you already called your bank before you came in to complain.
-The head office says "Nothing we can do. They have to follow it up with their bank. That's what the subcontractor said."
-The store has to tell you to call your bank, even though they know you already did and it won't get you anywhere. You get mad at the cashier because you have no one else to complain to. But it's not the cashier's fault nor is it in the cashier's control.
-You ask that the store give you a refund at the store level and the store refuses. They can't hand out $159, especially after they've been specifically told to tell you to call your bank. If they gave you the money they'd get fired. Afterall, all the paperwork says the store and the head office didn't do anything wrong. For all head office knows the cashier is making up this story as an excuse to take $159 and keep it but pretend they gave it to you.
-You never get your $159 back.
-The subcontractor has your $159 and there's nothing you can do about it. You don't even know the name of their company. Or most likely some employee at the subcontractor office has your $159 and made the paper trail disappear.
-You will never get your money back.
So you see that outsourcing is really just a way of spreading responsibility around so that no one can really be blamed for anything because there's no direct evidence that any one orgainzation or person was responsible for anything that goes wrong. This is true anywhere that outsourcing happens, especially in business and government.
Nowadays when you hear about these giant debit and credit frauds, they often have taken place at these subcontractors' offices. Someone who works there, or a team of people who work there, get together and steal thousands of them.
Then they wait.
They use them themselves online, or use their jobs to process them in a way that no one will see them.
Or they go on the internet and sell them or exchange them with others and then those people try to use your credit card information.
This can take months.
So your credit card has been compromised for weeks many times before the first signs of fraud appear and you wonder how it happened but the truth is you'll never know because you can't tell when it happened or even if it was recently or a long time ago, you can't tell which companies had access to your credit card information, you can't tell the names of the employees who worked for those companies and if the police or the bank know they usually won't tell you either.
So just imagine it. Every time you've used your credit card in 2010, all your information has gone through the hands of all kinds of strangers and it's sitting in databases around the world. The only people who don't have any knowledge of where it's been since you made those purchases are you and the person you handed you card to when you bought them.
Those chip cards are great at preventing a lot of types of fraud but they can't protect you from giant computer systems processing your numbers (especially if they're outside the county) tended to by low-wage employees of anonymous subcontractors. That's where your main danger lies.
And this is not limited to purchases on the internet. This is true of many mainstream stores you might enter and make a purchase at.
So the rules are:
1. Pay cash.
2. Don't have all your money in one place. Have your spending money for this week (or this week and next week or however you plan your finances) in one account and move everything else out of that account into another account where you do not use a bank card to purchase anything in stores or to take out money from ATM's that do not belong to your bank.
3. Do not have credit cards with big credit limits. Have a few cards with smaller limits on them.
4. Eye your debit and credit statements like a hawk and always keep your receipts! It only takes one time to regret not keeping them.
5. Every time you swipe your card think of the long line up of people who are going to have access to your information and ask yourself "if something happens to my info from this purchase will I be able to handle it or will I be screwed?" If the answer is "you'll be screwed", repeat steps 1-4.
Another piece of advice: if you buy things online do so with a credit card that has your lowest limit. Do not use more than one card ever on the internet. Have an internet card (you can use your internet card for other things but if you have two credit cards, make one of them your internet card and lower the limit). The card I use on the internet was the one that got cloned. The very first time my purchase got turned down on iTunes I knew exactly what had happened and I thought to myself "my card's been cloned by one of those credit card companies that processes sales on the internet. Considering how much porn I subscribe to it was only a matter of time." And the good thing is that card has a very low limit. Even if everything had gone terrible wrong, they couldn't have stolen that much.
But don't assume there are good places and bad places to use your card. It's a risk every time.
Protect your PIN.
If you really want you can put "Please ask for photo ID" on the back of your credit card instead of a signature.
But your main source of debit and credit fraud is just through the normal use of your card in the usual way at a store.
Thanks to Visa for catching the problem right away!
Happy shopping and watch out for what you do with your cards!
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Photo:

Visa by DeclanTM is licensed under a Creative Commons Attribution 3.0 United States License.







