The Science of Credit Card Fraud


The Science of Credit Card Fraud: Understanding the Threats and Safeguarding Your Finances

We take a brief break from the general cheeriness of our holiday reportage. If you haven’t seen it, PBS’ “Nova” — the science reporting show — had an article on their website from one of their contributors about how his identity was hacked, and used in an attempt to run up credit card fraud prevention charges.

The Alarming Tale of Identity Theft

The hackers didn’t just have pilfered charge card info — they had his Social Security number, address, birthday, and mother’s maiden name as well, and succeeded in changing contact info for his account!

The contributor, Phil McKenna, notes that “each year 13 million Americans, or 5% of the entire U.S. adult population, are victims of identity theft. Fraudulent transactions, including purchases made on existing credit cards, opening new lines of credit, and wiring money from victims’ bank accounts, cost financial institutions and individuals more than $20 billion each year, according to a recent study by financial analysts at Javelin Strategy & Research.

Unraveling the Methods of Fraudsters

The Power of Information

The answers are varied, and fascinating. For example, a prof at Carnegie Mellon “showed that, with some basic demographic information and a general understanding of how the federal government assigns social security numbers, miscreants could predict individuals’ numbers with an alarmingly high degree of accuracy.”

Hiding in Plain Sight

However “this assumes that a thief knows the date and location of your birth, facts which some of your friends may not even know. But chances are this information is hiding in plain sight. Using a webcam and commercially available image recognition software, Acquisti’s team was able to identify by name 30% of students on a North American college campus simply by taking their picture and matching it to a database of publicly available images downloaded from Facebook. In many cases the Facebook accounts provided the dates and locations of students’ births.”

Protecting Ourselves and Our Institutions

No System is Perfect

“No system is perfectly secure,” the article notes, also referring to recent data breaches suffered by Experian and LexisNexis, “ but there are relatively easy steps that financial institutions could take now that would help prevent such breaches from occurring. Simply requiring organizations to establish security policies on how they safeguard consumer information would go a long way… In a recent study of health care and financial industries, Thaw found that institutions that had such policies were four times better at preventing security breaches than those that didn’t.”

AVPS’s Commitment to Security

Which means, in this holiday season of such heavy card use, we hope you’re taking care both as a consumer, and as a merchant. You can also rest assured, as far as your merchant accounts, that AVPS is constantly updating its own security systems as well, keeping that proverbial eye out for fraud to catch it before it can snowball.

Final Thoughts and Call to Action

We commend Phil McKenna’s full account to your attention — and we’d also advise getting in touch with your AVPS Account rep, if you haven’t in awhile, to go over your account options, this holiday season. We want to make sure you’ll be able to sleep soundly while St. Nick is doing his work — since, unlike most people who are breaking in at four in the morning,  the jolly one is usually up to some good when he does it.

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