"It's really amazing that in the age of unbelief, as a smart man called it, there isn't even more fraud. After all, with no God, there's no one to ever call you to account, and no accounting at all if you can get away with it." (Ben Stein1)
Luke 16:11, "Therefore if you have not been faithful in the unrighteous mammon, who will commit to your trust the true riches?"
John 10:10, "The thief...come[s] to steal."
The objective of this article series is to inform and motivate the Christian to better organize his finances. Because we live in a fallen world and among sinners, and because the Christian is to be a steward of all that the Lord has entrusted to him, we must be wise against the evil intentions of men. In former days, that threat might have been the wayside robber or the con man, but today the threats are more complex. This article addresses two of those threats: credit fraud and identity theft.
Several years ago I took my brother out to a casual restaurant near my home in Plymouth, MN. We had leisurely meal and lingered to enjoy each other's company. I volunteered to pick up the tab and provided the waitress my Chase credit card. Shortly she returned it, I added a tip and signed the check and we left.
A typical restaurant charge will display only the meal amount sans tip as a pending change on a credit card or bank website immediately after the charge is rung up. After several days when the payment clears the total restaurant amount including tip will display on a bank or credit card website.
Later that evening I logged onto the Chase website to view my day's purchases. The restaurant change was indeed pending but there were other pending charges to my account that I had not authorized--both to porn-related websites and services.
"Credit card (or debit card) fraud is a form of identity theft that involves an unauthorized taking of another's credit card information for the purpose of charging purchases to the account or removing funds from it."2 Credit card fraud takes one of these forms:
- Unauthorized use of another's credit to procure goods or services. This would be the most common form of credit fraud;
- Purchase of goods of services with one's own credit card knowing that there is insufficient credit to pay for the goods or services procured; or
- Sale of goods or services to another knowing that credit fraud is being perpetrated. An example of this would be a store clerk knowingly accepting a fraudulent credit transaction.
A recent Forbes article states that 27% of cardholders have experienced credit fraud over the last years. Anecdotally I have been a victim of credit fraud twice in two years: once in the above cited case and last year on my corporate card. Credit fraud is less prevalent in Europe because those countries use a microchip in the credit and debit cards to enhance transaction security. This technology is called the EMV card and it will soon be common in the United States.3
Significant United States Federal legislation is in place to protect the consumer against credit fraud. "If someone makes unauthorized transactions with your debit card number, but your card is not lost, you are not liable for those transactions if you report them within 60 days of your statement being sent to you."4
In the case of the fraudulent charges on my Chase card, I called Chase that very day. They canceled that card and issued me a new one and even sent it via FedEx to my home. The charges were not held against me.
Identity Theft is a more devious and dangerous type of credit fraud. It is evidenced in two categories: Account takeover and application fraud. We experienced ID theft in early February after returning from a trip to Florida.
Our bank notified us that the address of our credit card had been changed. When I logged onto our bank account and checked the address for our accounts our credit card had an address in Maurice, Louisiana.5 "Account takeovers typically involve the criminal hijacking of an existing credit card account. Here an offender obtains enough personal information about a victim to change the account's billing address. The perpetrator then subsequently reports the card lost or stolen in order to obtain a new card and make fraudulent purchases with it."6
- A $650 Canon camera
- A $25 PlayStation video game
- A $20 set of earphones
They opened accounts in my name (with my home address as the billing address!) with Bill Me Later and Newegg Preferred Account to pay for these items.
"Application fraud refers to the unauthorized opening of credit card accounts in another person's name. This may occur if an offender can obtain enough personal information about the victim to completely fill out the credit card application, or is able to create convincing counterfeit documents."8
Our response to the two identity theft events was as follows:
- In the case of the account takeover, I immediately left work and went to my local bank branch. They canceled all our debit and credit accounts: HSA, ATM/debit card, and credit card. I changed the password on all of our accounts to a much more robust password. (It actually was fairly robust before: both upper and lower case alpha characters, at least one special character, and multiple numeric characters. I changed the authentication code that one is asked when one calls the phone bank--to a much more robust password.)
- In the case of the application fraud, we filed a police report with our city. I had to wait several days and then I visited the police department and requested a copy of the police report. This report was later provided to a service we procured called Experian Protect My ID.
- Using this service we placed a fraud alert on our credit files at the three major credit-reporting agencies. We also locked our credit to prevent new credit from being opened in our name without the credit-issuing agency contacting me prior to an account being opened.
When I recently traveled to Charlotte on business, I carried less than $30 in cash for a 4-day business trip. A pickpocket could have stolen my wallet and the maximum loss of cash would have been that minor amount of money. In today's high-technology world, the threats are much more insidious than the pickpocket or the common thief. More could be said about Credit Fraud and Identity Theft but this article explains the basics. Subsequent articles will address organizing one's finances to both protect against these threats and enhance one's financial stewardship.