Most of the executives’ world over, credit cards has been their key to online shopping and other online transactions. Credit cards have made our lives easier in more ways than one, but they also leave us susceptible to frauds. This article helps to save you from a possible credit card fraud.

In recent times, there has been a spate of news items revealing a credit card fraud. In one such item, two youngsters were caught duping credit card holders by offering them new credit cards with higher credit limits by trading in their old credit cards. The youngsters then used the old cards to make their purchases, mostly electronics.

This is how they laid the plot. They would call up credit card holders representing themselves as employees of the credit card company. They would inform these clueless customers about a new scheme about new credit cards with greater purchase limits in exchange of old ones.

Then they would also inform customers that the company's representative would soon visit them with the new card, which would be activated as soon as they filled in a form!

This news only reinstates the importance of being a vigilant customer and using credit cards with utmost prudence.

Secure Tips

In order to save yourself from a credit card fraud, here are a few things one can do:

* If you lose your credit card, it is necessary to inform your credit card company immediately. This will enable the card issuer to freeze the card with immediate effect and prevent any purchases on the card. The important thing for you is that your liability is limited once you inform the credit card issuer.

* Destroy your old card completely before you begin using your new card. This is important even if your old card has expired or you are upgrading your card.

* Keep your card in a safe place and do not allow other people to handle it.

* Be prudent about signing up for new offers. Double-check the genuineness of the scheme. A simple way to verify genuineness of any scheme is to call up the credit card company and inquiring with them.

* Change your PIN at regular intervals. Do not use obvious PIN like birth dates.

* Inform your credit card company immediately if you do not receive your monthly credit statement. It could be a case of identity theft where the fraudster has changed your billing address.

* Use chip based credit cards. These cards offer better security than credit cards with black magnetic stripes. This is because in a chip based card, all information is stored in the small chip in encrypted format and it also uses a PIN. This makes changing or copying this data extremely difficult. So, the chance of data being misused while swiping the card is very remote. It is the highest level of security that credit card companies can offer at present. Citibank and Kotak Mahindra issue chip based cards to select high range customers. Axis bank's VISA Platinum card is also chip-based. HDFC Bank also has begun issuing these cards.

* Be careful while shopping online. This is because you are required to give the CVV number for making purchases over the Internet. For this, be sure you shop only from secure websites. Ensure that the website is certified by VeriSign. Look for a yellow lock on the bottom right hand corner of the screen.

* If you have a large credit limit on your card and use it frequently for several purchases including online and telephone purchases, it is a good idea to get your card insured. You cannot prevent credit card fraud but at least minimize its impact on your financial stability! You can protect yourself from fraudulent charges on your card up to 12 hours before reporting the loss to the credit card issuer.

Protection against Damage or Misuse of Card

* To prevent damage to the card, don't keep it in an area having a continuous magnetic field, for example, near a TV; don't scratch or tamper with the magnetic strip that contains coded information for the security of your card; don't bend the card or keep two cards with their magnetic strips facing each other; and keep the card away from extreme heat and direct sunlight.

* Never hand over your card to any stranger or share its details with anyone, not even to some one claiming to represent the card-issuing bank or its associates.

* Never reveal your PIN (personal identification number) to anyone; don't keep the card and the ATM PIN together. Surrender the card only to a designated official of the bank after cutting it diagonally into two pieces across the magnetic strip.

* Keep a record of your credit card numbers and telephone numbers for reporting lost or stolen cards.

Avoiding Frauds in Online Transactions

A system of providing for additional authentication/validation based on information not visible on the cards for all online transactions; and

A system of 'online alerts' to the cardholder for all transactions of the value of Rs 5,000 and above.

By taking certain precautions, users can prevent their credit or debit card from being misused both online and offline:

a. Do not provide photocopies of both the sides of the credit card to anyone. The card verification value (CVV) which is required for online transactions is printed on the reverse of the card. Anyone can use the card for online purchases if the information is available with them. Do not click on links in emails seeking details of your account: they could be phishing emails from fraudsters. Most reputed companies will ask you to visit their website directly;

b. While using a credit card for making payments online, check if the website is secure. The address bar will begin with "https". The CVV will also be required;

c. Do not give any information to persons seeking credit card information over the phone.

d. Notify your bank/credit card issuer if you do not receive the monthly credit card statement on time. If a credit card is misplaced or lost, get it cancelled immediately.

Guarding Against Unsolicited Cards

Previously, most of us would have the experience of receiving credit cards even without applying for them. So how does the Government of India or Reserve Bank of India (RBI) helps us to discard them?

Banks/NBFCs (Non-Banking Financial Companies) have been advised that unsolicited cards should not be issued. The written consent of the applicant would be required before issuing a credit card.

If an unsolicited card is issued and activated, the card-issuing bank shall not only reverse the charges, but also pay a penalty to the recipient amounting to twice the value of the charges reversed. Any loss arising out of misuse of such unsolicited cards will be the responsibility of the card issuing bank/NBFC.

—By: R. Manoj, The author is an Assistant Editor at Fanatic Media, Bangalore. He is also an Independent Researcher, specializing in Systems Security. He has an active interest in designing security algorithms for securing mission critical systems. He can reached at infosecurity@fanaticmedia.com