'Card Not Present' Fraud

Making purchases without a direct seller is becoming more and more popular. Internet, mail order, telephone and fax purchases are easy, quick and efficient methods of buying goods and services from the comfort of your home. However, each of these purchase methods presents its own unique security risks: you are using your card to make purchases when no signature nor PIN verification is required. For this reason, card not present fraud is possibly the easiest kind of fraud to commit: the criminal can simply note down your card details, even from discarded receipts, and use them to make purchases. They do not have to have your card, a copy of the card or your PIN. The fact that:

• the seller cannot assess the security features of the card to determine its authenticity
• the seller does not verify either a signature or PIN, and
• the card provider does not verify each transaction with you

all make it difficult to counteract this form of fraud.

Both MasterCard and VISA payment systems have set up extra security to combat this type of fraud with a new level of verification. Their initiative focuses solely on online shopping and requires that you enter your PIN or a designated password online to verify your identity. For more details see Online Security Measures.