Watch out for new fraud sting

The introduction of chip-and-pin just over a year ago was supposed to bring a stop to credit card fraud. But the criminals always seem to be one step ahead of the banks and financial institutions.

The latest scam we’ve come across can hit people who never leave sight of their card or reveal their four- digit Personal Identification Number (PIN) to another soul.

Even worse, experts are warning that banks may wriggle out of helping victims of this new type of fraud. Most will still reimburse victims as long as they have not been careless with their security details, by say revealing their PIN to another person.

With this new scam, which involves you typing in your PIN, it’s almost impossible to tell whether you have been defrauded or actually carried out the transaction yourself. If you can’t prove to your bank that you haven’t done anything wrong it could refuse to pick up the tab. The result: you end up thousands of pounds out of pocket with no hope of redress.

It’s a complicated sting but one that researchers say could be a huge problem. I won’t bore you with the details (in fact I’m struggling to get my head round it), but if you would like to know more take a look here.

In simple terms, it involves fraudsters placing a tampered chip and pin reader in a shop, restaurant, garage or any other place that people regularly spend money.

Say you’ve run up a £30 restaurant bill. When it’s time to pay, the criminal hands you a reader that looks like the real thing and acts like the real thing. Unbeknownst to you the transaction is being relayed to an accomplice who is primed to spend £3,000 on a diamond ring in a jewellers’ shop.

Provided the criminals get their timing right the transaction from the jewellers shop terminal is sent back to the restaurant’s machine and through your card so that the ring is charged to your account.  None of this shows up on the terminal so you walk away thinking you have paid for a £30 meal when your statement reveals you have actually paid £3,000 for a diamond ring.

Can criminals be bothered to go to these lengths? Absolutely, say fraud experts so it's an issue that we would like to keep an eye on. If you have been the victim of fraud and your bank or credit card company has refused to reimburse you we’d like to hear from you.

Comments

[John Kottler]

Dear Sirs

In your article yesterday in the Money section you invite readers to let you know if insurers have let them down. This was in response to your article on heartless Norwich Union, and I would like to let you know about an experience I had with this errant insurer, who tried to repudiate a policy I had with them, because of a failure to notify them of an unrelated incident.

The way I dealt with this was to write to their Chief Executive, Patrick Snowball, quoting their own motto at the head of the letter, but appropriately modified as follows, as a suggestion for their new motto:

"Let us quote you happy.....
... and treat you crappy."

This did the trick by return of post, with a cheque for £35,000 for my stolen car and a personal letter of apology from Mr Snowball, which I think might have been cynical in the light of your article in the Sunday Times yesterday. I know of other people who have been badly treated by Norwich Union where they have taken out their policy and paid their premiums in good faith, and the practice needs to be stamped out. I applaud the Sunday Times for drawing attention to it and urge you to keep up the good work. Please adopt my motto - I have others for other companies if you need them!

Yours faithfully

John Kottler

[Andy Taylor]

But presumably the fact that the restaurant meal and jewelery transaction appear on the card at exactly the same time should ring alarm bells with the bank software?