Indian economy is greatly aided by the introduction of modern tools of information technology. There have been path-breaking changes in the banking sector, especially in the field of e banking. Gone are those days when a person had to keep his chequebooks safely under lock and key. We have come a long way to an era of plastic money. Instead of cash, the wallet is heavily loaded with debit and credit cards from different banks. These cards proved to be 'shoppers paradise' and 'ultra-convenient' as the holders were no more required to carry cash and banks started lending money with modest card procuring formalities.
Nevertheless, as a famous proverb goes that 'every coin has two faces', it also holds water for the credit cards. In spite of giving such a convenience to the consumer, credit cards have known to bring grief, insecurity and an unparallel sense of financial vulnerability to many customers.
The recent credit card frauds that were uncovered in Jaipur, Agra and Mumbai 1 clearly support the above statement that Credit Cards tend to be abused. Recently, there has been a sharp rise of online credit card frauds 2 as technology is exploited to develop new innovative techniques to commit fraud. The most common type of modern day credit card frauds include 3
(i) Production of fake and counterfeit cards.
(ii) Skimming - Process of copying genuine card data on another magnetic strip.
(iii) Phishing - Attempt to fradulently acquire sensitive information, such as usernames, passwords and credit cards details, by masquerading as a trustworthy entity in an electronic communication
(iv) Site Cloning - Creation of an identical, but false website as similar to the bank
(v) Stolen Card Fraud - When a card holder loses or has their credit card stolen, it is possible for the thief to make unauthorized purchases on that card up until the card is cancelled
(vi) Account Takeover Fraud - Fraud perpetrators call in and impersonate actual cardholders using stolen personal information. They have the address and other information of the cardholder changed to an address they control. Additional cards and possibly PIN mailers are requested and issued to the new address and used by the fraudsters to make purchases and/or obtain cash advances. Sometimes the fraudster will attempt to add themselves or an alias that they control as an authorized user to the account in order to make it easier to commit the fraud.
Technology today enables fake cards to be created from scratch by obtaining personal data about an individual and the use of requisite equipment. This method requires a high degree of skill as the cards offered by banks come with a lot of security features making it difficult to replicate the full mechanism. The offender also uses this fake credit card money for the other services which are available to him through that credit card, as for example, for shopping, buying online air tickets etc.
In April 2006, the case came up where a 26-year-old Mumbai executive keyed in her credit card number and the three-digit security code on the e-booking site of an airline. She bought a ticket for Bangalore. In July, she was shocked to find an Rs 20,000 additional credit drawn from her account. 'Two tickets from the same airline were booked on two different days in June using my card,' she says. The first was a Dwarka-Mumbai ticket for Rs 6,000, and the other, a Delhi-Dubai one for Rs 14,000. She did not get a response from her card company till August. Then she approached the police to file an FIR. But they told her that they did not know what a credit card was. Thereafter, she went to the cyber crime cell, which in turn asked her to first lodge an FIR with the police. She got a cyber crime officer to speak to the police and finally got her complaint registered. But till now the case has not been solved, by the cyber crime or by the police. 4
Such instances and many more to be quoted in this article take us to the logical conclusion that credit cards are credit cards are making consumers more prone to financial vulnerability in the hands of notorious market elements.
Another issue, is the usurious clauses and unfair trade practices in the typical standard-form contracts adopted by Credit Card issuers. These standard form clauses are so negatively worded against the consumers, that most consumers have had bitter experiences.