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People walking around with their wallets sticking up out of their back pockets is a sight pickpockets in Japan are only too used to being grateful for.

Carrying a credit card is like having a wallet bulging with cash, typically 100,000 yen or more at a minimum, just waiting for you to spend whenever you want to. But just as you shouldn’t leave your wallet out of sight and out of mind in your back pocket, so you need to take a few precautions with your card.

Credit card expert Daniel J. Lintz, the director of corporate communications Japan for Visa International Asia Pacific Ltd, told The Japan Times in a recent interview that most credit card fraud takes place when you take your eyes off of your card.

“Never let your card out of your sight,” Lintz said. “Think of the card as cash when you are using it.”

Your credit card need only leave your hand for a matter of minutes for you to fall victim to fraud. While your card is out of your sight, a cunning criminal can steal the information off your card and then return it to you apparently safe and sound. The stolen information is then used to make a fake card, which is used to make illicit purchases — that bulging wallet is now being spent under your name.

Lintz said that while credit card usage in Japan still lags behind that in other Western countries, and even in other parts of Asia, credit card usage has grown strongly in recent years. But credit card fraud has also risen, hitting a peak of 30.9 billion yen in Japan in 2000, according to the Japan Consumer Credit Industry Association (JCCIA), and still claiming 27.2 billion yen in ill-gotten gains in 2003.

While most victims of such fraud do not have to foot the illicit bills — unlike the victims of ATM bank card fraud, who often have to pay for being victims — ultimately the consumer has to pay that multibillion-yen bill in some form or other.

But Lintz says avoiding the anguish, inconvenience and possible cost of credit card fraud often comes down to some simple precautions.

More than half of credit card fraud is due to criminals using counterfeit cards. The devious practice accounted for only 6 percent of card fraud in 1997 but had rocketed to 60 percent of the take by 2003, according to the JCCIA figures.

The fraudsters pull off their crimes by first stealing the information off somebody’s genuine card, a practice known as “skimming.” They pass the card through a card reader, records the data off the card’s magnetic strip. Typically, this is done when the card’s holder uses it to buy something. You hand your card over to make a purchase and it is swiped once to carry out the transaction, but it is swiped a second time, without your knowledge, to “skim” its data.

Lintz said popular places in Japan for such skimming are gas stations, hotels, restaurants and, sometimes, even ordinary shops. Often the person doing the skimming is a bona fide employee and they sell the information to criminals.

When you make a purchase with your credit card you should watch the person serving you as they swipe your card through the reader and then get your card straight back. Sometimes in restaurants when you pay for a meal you hand your card over, it is put in a folder and taken away for swiping. While most of the time this is perfectly legitimate and your card is not misused, letting your card be taken out of your sight leaves you vulnerable.

Some fraudsters are so adept at the act that they can skim your card in front of you with a small card reader “put in the palm of their hand,” Lintz said.

The hand may well be quicker than the eye but keeping your eye on the card will at least make the practice more difficult for the crooked magician.

Sometimes, the Visa expert said, you don’t even have to use your card to have its information stolen. When people visit places where they have to part with their trousers, such as saunas and the like, then their credit cards are anything but safe in their wallets. The enterprising skimmers can simply purloin the card temporarily and skim it without the owner being any the wiser, Lintz said.

The best way to combat this theft by neglect is to not patronize places where you first part company with your trousers before losing the shirt off your back.

Beyond the making of fake cards, most of the rest of credit card fraud in Japan is split about evenly between lost and stolen cards, Lintz said, with 10.7 billion yen of losses due to those two causes in 2003.

“One of the most frequent places (for stolen cards) is cars,” Lintz said. This is because many Japanese people leave their credit cards in their cars, where they are handy for paying highway toll fees, he said. Unfortunately, such habits are equally convenient for thieves, compounded by another common habit, that of leaving unattended cars unlocked.

Leaving cards unattended at home or in a hotel or any such place in plain sight where the less ethical can get hold of them is equally dangerous.

Preventing such theft largely depends on taking the simple precaution of “keeping your card in a safe place,” Lintz said.

Furthermore, cardholders should sign the back of their cards as soon as they get them, so when the card is used there is a signature to be compared to that of the person presenting the card.

Cardholders should also keep a list of all the numbers of their credit cards in a safe place. This information is vital for informing the issuer of the card, the bank or other financial institution where you got the card from, in the event that a card is stolen.

If your card is lost or stolen then you must, Lintz said, inform the issuer as soon as possible.

A spokesman for the Ministry of Economy, Trade and Industry, which covers the credit card industry, said that in general, cardholders are not held liable for fraud as long as the case does not involve “a willful or grossly negligent act on the part of the customer.”

Although different companies may have different rules, the spokesman said that in general the rule was that “In the event that a report is made that the credit card was lost, stolen or missed, a customer shall not be liable for use by a third party without authorization during and after the period of 60 days prior to the date of receipt of such a report.”

Lintz said this general lack of liability is despite the fact that “there is no specific legislation” that governs the issue.

In regards to counterfeit cards, computerized searches of purchasing records can track down the place where the card was skimmed, Lintz said. This can also let the card issuer identify when a card’s suspect purchases began. So, “if you can convince them (the card issuer) that you didn’t do a transaction then you wouldn’t be held liable.”

Cards themselves are not the only items needing protection. Credit card receipts should be kept as a record of your legitimate purchases. They also need to be disposed of carefully when are you finished with them as they can provide enterprising thieves with your credit card number, expiry date and name — the very information fraudsters look for.

Receipts are particularly dicey in Japan as many shops — and notably the toll booths at highways — print the entire number on receipts for customers , rather than truncating key parts of it as is the practice overseas.

Lintz said Japan is now addressing that issue and a form of mandatory truncation is on the way but receipts should still be treated carefully, so obliterate the number before you dispose of the receipt.

Surprisingly, the Internet, perhaps seen as a mother lode for credit card fraud, does not raise so many concerns in Japan, the Visa expert said. Only about 40 percent of online purchases in Japan are done using credit cards. Moreover, typically when you make an Internet purchase in Japan you must specify an address for your purchase to be sent to. Having such sufficiently legitimate-looking drop points to hand has proven to be a nuisance for thieves here.

As extra protection, Internet sites often ask when you make a purchase for a three-digit number printed on the back of your credit card, a form of extra verification. Visa also offers a service in which you are given a user id and password, as an extra line of online defense, Lintz said.

However, the rise of “phishing” schemes, in which the unwary are directed to bogus Web sites and tricked into offering their credit card details, is an increasing threat. A recent twist on the theme is supposed “cut-price travel” Web sites where customers can book their holidays and pay by credit card, straight into a fraudster’s pocket.

While the old adage about “customer beware” may be especially apt in such cases, the credit card industry is not placing the sole burden on cardholders to beat the fraud artists. Just as technology has aided the thieves, so it is now being employed against them in the form of the much-heralded “smart cards.”

Lintz said that while these are virtually the same size as the traditional magnetic strip cards and look somewhat similar, they pack tiny microprocessors, or chips, that put them in a different technological league altogether. The chips on these cards “are as smart as a 1980s PC.”

They include the same information as their magnetic cousins, such as the name of the credit card holder, the card number and expiry date but as the chip is closed if the card passes through the wrong hands thieves can’t just “skim” information off them.

Using a pin number or password with the cards also boosts the protection on them. Of course, the cardholder does not want to keep that information with the card as a thief who steals the card won’t be able to use it without the extra information. Also, Lintz said, you shouldn’t pick pin numbers or passwords that are based on your birthday or phone number or other information that thieves will find easy to decipher.

Keeping such information secret is also vital as your credit card company may not be so forgiving in regard to not holding you liable for fraudulent purchases made using your card if you allowed the criminals to get your pin number or password.

The future is already here with the cards as more than 20 percent of Visa cards in Japan are now smart cards and other companies like JCB, American Express, Diners Club and others are also adopting the cards, Lintz said.

The METI spokesman added that the ministry supports the adopting of such “smart” cards because they “are effective in defending against forged credit cards.”

Another high-tech defense against fraud that is gaining fame in Japan, use of biometrics, is unlikely to be used for credit cards, Lintz said.

Under biometrics, your card has a record of some of your biometric data, such as your fingerprint or the veins in your palm. When you put the card in a card reader you then also scan your finger, or wrist, to have the biometric information checked to make sure that it tallies with that on the card.

Biometrics can be used for ATM cards in Japan because financial facilities here, such as post office ATMs, are expected to be able to use the new system. But while smart cards and their chips are being increasingly used both in Japan and overseas, the biometric systems that are set to take off in Japan are not being used in other countries. Any system on a credit card issued in Japan has to be able to be used overseas as well, so you can take your smart credit card with you on holidays.

Thanks in part to such new technology, while credit card use is growing in Japan, the fraud business that preys on it seems to no longer be a growth industry.

While credit card fraud rose sharply between 1997 and 2002, it actually fell slightly last year, Lintz said as “fraud detection systems have pushed it down.” The turnaround is good news for the credit card industry in Japan where cash remains king. Credit cards must be seen to be safe if they are to take off here the way they have overseas.

“The penetration of cashless payments in Japan ranks among the lowest in the developed world,” Lintz said. “Japanese consumers are extremely risk averse,so building confidence in the security of the Visa payment system is out top priority.”

“Over the past five years, Visa members in Japan have probably invested over 100 billion yen in the implementation of EMV smart card technology, advanced fraud detection systems, and online payment security.”

But just as charity starts at home, so does credit card security, or at least it starts in your wallet.

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