SAITAMA – A 29-year-old Chinese man has been indicted in what is being described as Japan’s first known fraud case linked to Apple Pay, the new mobile payment service.
In March, four Chinese nationals allegedly used two iPhone 7s to purchase 981 cartons of cigarettes worth ¥4.45 million via Apple Pay at a convenience store in Saitama Prefecture using stolen credit card data.
Because the payment service only allows up to ¥20,000 to be spent per transaction, the phones were placed on the store’s digital reader 704 times over a 10-hour period, the police said.
The store manager who handled the hundreds of transactions didn’t suspect anything amiss and just thought the four Chinese were tourists on a shopping spree. But the credit card company got suspicious and reported the activity to the police, who said the credit card data registered to the phones had been stolen.
Security experts are urging credit card companies to adopt stricter ID verification measures to guard against similar types of fraud.
According to a major credit card company, customers need a confirmation code to register their credit card information with Apply Pay. In the Saitama case, the suspects allegedly asked the company to send a new confirmation code to a new email address, claiming the owner of the cell phone being used had changed, the police said.
“It may be that because credit card companies want to increase users, their measures to verify identities have been lax,” one investigator said.
Yosuke Seta, who heads fjconsulting Inc. in Tokyo and is well versed in credit card security, said card companies need to have stricter rules for ID verification since similar fraud cases using Apple Pay have already been reported in China.
“There could be more victims in Japan,” Seta said.
Because more shoppers, including tourists, are expected to use electronic payment in the run-up to the Tokyo Olympics in 2020, police are worried that similar cases of fraud will increase, prompting the Saitama police to hold a meeting with credit card companies to exchange opinions on preventive measures.
“Ensuring security (for credit cards) is becoming more and more important,” a senior Saitama police official said.
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