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Credit Card Fraud

Commercial Crimes » Credit Card Fraud

Modern society is increasingly becoming a ‘cashless society’. People all over the world extensively use plastic payment cards. They form part of the tools in the daily transactions in the financial markets. Unfortunately, credit card fraudsters too have extensively penetrated these. As Malaysia develops fast into major financial and tourist centre, it increasingly becomes vulnerable to credit card fraud. In 2004, there are about 6.2 million credit cards in circulation in Malaysia, there were 204 reported cases compared to 244 cases in 2003. In terms of reported monetary losses, there’s an increase from RM721,704.58 in 2003 to approximately RM4,799,021.51. In the last few years, the banking industry in Malaysia has suffered huge losses to credit cards fraudsters because of wire-tapping devices. Fraudsters even modified digital voice recorders or MP3 players to tap telephone lines. Concerned with this skimming activity, the Commercial Crime Investigation Department (CCID) started to work closely with the Central Bank of Malaysia to compel financial institutions to issue ‘Europay, Mastercard and Visa’ (EMV) chip cards and encrypt all credit card data. Most of the banks started giving out EMV chip cards in mid-2004 as well as encryption and all the banks had complied with these instructions. By the end of 2005, all credit cards issued by banks were EMV compliant. The implementations produced very encouraging results and reduced fraudulent credit card transactions in Malaysia by 93% for the year of 2005 compared to year 2004. CCID also foresee some of the Malaysia credit card fraudsters will migrate to neighbouring countries to conduct their illegal activities. As such, it is imperative that the regional enforcement agencies and Asia Pacific police agencies should enhance existing close rapport and give mutual assistance in combating the crime.

Modus Operandi

Fraudulent applications

Apply for a credit card with fake identification card, pay slips and employer confirmation letter. The syndicate will use an abandoned residence as the postal address.

Account takeover/Identity theft

We believe that Account Takeover activities are inside jobs where the suspect will provide all account information of the card owner to a syndicate. The syndicate will then call the ‘Card Centre’ to introduce themselves as the owner of the card and report a missing card. The syndicate will then apply for a change of address and after approval, the bank will replace the reportedly missing card without the knowledge of the original owner. The new card will be delivered to the syndicate’s address.

Non-received issue (NRI) fraud

An incident where the delivery of the credit card to the customer who applied, is stolen or intercepted. The postal worker is most likely involved. The original cards then fall into the hands of syndicates, who max out purchases on the credit card. Cash withdrawals will happen if the original credit card comes with an ATM PIN for cash withdrawals.

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