Deadline June 28,2012
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CREDIT CARD FRAUD LawTech Custom Publishing, Inc. Copyright 2006OVERVIEW 1. The history of credit cards 2. Security features used in credit cards 3. Types of credit card fraudHISTORY OF CREDIT CARDS ? Western Union, first company to issue credit cards to its customers in 1914 ? 1920s, companies issued credit cards to make purchases at those businesses ? First modern day credit card introduced by Diners Club, Inc. (1950) ?Charged cardholders an annual fee ?Billed on monthly or yearly basis
Economic Crimes CREDIT CARD FRAUD LawTech Custom Publishing, Inc. Copyright 2006 OVERVIEW 1. The history of credit cards 2. Security features used in credit cards 3. Types of credit card fraud HISTORY OF CREDIT CARDS Western Union, first company to issue credit cards to its customers in 1914 1920s, companies issued credit cards to make purchases at those businesses First modern day credit card introduced by Diners Club, Inc. (1950) Charged cardholders an annual fee Billed on monthly or yearly basis HISTORY OF CREDIT CARDS (cont.) 1958, American Express established “Don’t leave home without it.” In 1959 Bank of America started BankAmericard which was the first national bank credit card Bank credited merchant’s account when sales slips were received Improved cash flow of businesses Bank assembled sales slips and bill Pay in full or monthly plus interest HISTORY OF CREDIT CARDS (cont.) 1966, Bank of America expanded their bank card program by licensing banks outside of California to issue cards Interbank Card Assoc. was formed and later became Master Charge 1976 BankAmericard renamed to Visa 1979, Visa introduced first electronic dial terminal at the point of sale (POS) HISTORY OF CREDIT CARDS (cont.) In 1982, Visa issues first premium card, Visa Premier In 1983, Visa launches the world’s first global ATM network 24-hour cash access to cardholders In 1995, industry-wide chip card specifications established Europay/Visa/MasterCard (EVM) HISTORY OF CREDIT CARDS (cont.) 1997, Secure Electronic Transaction (SET) 1.0 using smart card completed First saw general use in France, 1984 1998, Visa and Standard Chartered Bank introduce multi-use smart card In 2001, Visa completes first secure payment with Palm handheld computer Smart Visa business cards is launched in the United States SECURITY FEATURES USED IN CREDIT CARDS Credit Card Numbering System The first digit in the credit card number signifies the system 3-Travel/entertainment cards (37 American Express, 38 Diners Club) 4-Visa 5-MasterCard 6-Discover Card SECURITY FEATURES USED IN CREDIT CARDS (cont.) American Express Digits 3 and 4 ID the card type and currency Digits 5 — 11 are the account number Digits 12 through 14 are the card number within the account Lost and/or reissued card Digit 15 is a check digit SECURITY FEATURES USED IN CREDIT CARDS (cont.) Visa Digits 2--6 are the bank number Digits 7--12 or 7--15 are the account number Digit 13 or 16 is the check digit SECURITY FEATURES USED IN CREDIT CARDS (cont.) MasterCard Second and third digits and up to the first six digits are the bank number Digits after the bank number up to digit 15 are the account number and digit 16 is the check digit SECURITY FEATURES USED IN CREDIT CARDS (cont.) This numbering system, ANSI Standard X4.13-l983, is used by most national credit-card systems Phone companies, gas companies, and department stores have their own numbering systems SECURITY FEATURES USED IN CREDIT CARDS (cont.) Magnetic Stripe, also called magstripe Iron-based magnetic particles in a plastic-like film 20-millionths of an inch long Can be written on because can be magnetized in either a north or south pole direction, like a cassette tape Used to read the three-track stripe SECURITY FEATURES USED IN CREDIT CARDS (cont.) Track 1 holds 79 6-bit read-only characters Track 2 holds 40 4-bit characters Track 3 hold 107 4-bit characters Card typically uses tracks one and two Track three is a read/write track Encrypted PIN, country code, currency unit, and amount authorized SECURITY FEATURES USED IN CREDIT CARDS (cont.) Track one contains two formats Proprietary use of the card issuer Account number, country code, name, and expiration date Track two (banking industry) Account number, country code, expiration date, and discretionary data SECURITY FEATURES USED IN CREDIT CARDS (cont.) Counterfeiters sell magnetic strips piecemeal Counterfeiter can compile fraudulent bank card using computer, source materials, and peripheral equipment Credit card manufacturers are modifying magnetic strip coding to include additional personal identifiers SECURITY FEATURES USED IN CREDIT CARDS (cont.) Holograms Display objects in a 3-D way Effect is created by the interference of a split laser beam The three-dimensional effect cannot be reproduced with regular equipment Reproduction will just appear two- dimensional SECURITY FEATURES USED IN CREDIT CARDS (cont.) Credit cards began using in 1981 Visa uses a dove, and MasterCard uses interlocking globes Hologram is embedded in the plastic Counterfeits are usually affixed decals Large scale counterfeiting operations have developed in Taiwan, Hong Kong, and China SECURITY FEATURES USED IN CREDIT CARDS (cont.) Photos (face of credit cards) In use since 1972 Value as fraud deterrent questioned Eastman Kodak, Xerox, Gemplus and other companies have developed systems to digitally encode a customer’s photo within magnetic strip SECURITY FEATURES USED IN CREDIT CARDS (cont.) Microprint (micro-text) Finest structures or lines created from thinly printed characters or words Done at up to 5,000 dbi with special high resolution machines Microprinting is reproduced on cards to help prevent counterfeiting SECURITY FEATURES USED IN CREDIT CARDS (cont.) Ultraviolet Printing All major credit cards have letters or an image printed on the front of the card in Ultraviolet ink Under ultraviolet light, a large “MC” is visible on MasterCards and a large dove is visible on Visa cards AMEX appears on the American Express SECURITY FEATURES USED IN CREDIT CARDS (cont.) Signature Panel A strip of adhesive on back MasterCard and Visa have their names printed many times on strip Numbers are included on the signature panel that slant left and match numbers on the front of card American Express signature panel should have wavy black lines TYPES OF CREDIT CARD FRAUD SCHEMES Bank card fraud losses to Visa and MasterCard have increased from $110 million in 1980 to $1.63 billion in 1995 U.S. has suffered bulk of losses - $875 million for 1995 alone 71 percent of cards issued from U.S. Visa and MasterCard account for 65% of all outstanding revolving credit TYPES OF CREDIT CARD FRAUD SCHEMES (cont.) Mail/Credit Bureau Theft Simplest ways to obtain account information or actual bank cards U.S. Postal Inspection Service has implemented the Express Mail Label Profiling Program Mail quantity, delivery frequency, destination, label and packaging, etc. Developed initially to ID drugs TYPES OF CREDIT CARD FRAUD SCHEMES (cont.) Advance Payment Schemes Using a counterfeit or stolen credit card advance payment or overpayment can be made using a bogus check Account is credited upon receipt of payment Cash advances immediately can be drawn against the bank card TYPES OF CREDIT CARD FRAUD SCHEMES (cont.) Counterfeiting Fastest growing bank card fraud New technology has aided criminals in producing and creating cards Responsible for the overall increase in credit card fraud $60 million in 1991 to $282 million in 1993, a 370% increase Methodology of Economic Crimes teamwork 11 Week 11: Week Eleven - D: Teamwork You must not copy and paste information. Do not copy or paste information / Please ……. (In your own words, referencing) Your own words, referencing In this unit, we will look, in-depth, into hight tech financial crimes. The main issue we will look at this unit are credit crimes. Credit cards have become a tremendous tool for average citizens and companies, as they provide needed funds when money is tight. In fact, I started a business with a credit card. The problem with lines of credit, though, is the fact that they are not tangible and anybody can steal information in an intangible form. All it takes is to merely call and trick somebody, or steal their mail. This especially goes for devices that have been stolen or sold, as they can contain confidential information. I have purchased several computers at garage sales and found confidential information on them, that I "scrubbed". Welcome to unit 11! Only 200 words Instructional Objectives for this activity: Summarize the explosion of what many are calling the information revolution, especially with regard to the ease with which we can now obtain information about almost anyone. Privacy and private information is becoming a rare thing with the explosion of the Internet and the information revolution. Using yourself as your own test subject, use the Internet to discover as much information as possible that is on record about yourself. As a team concentrate on the following: 1. Places of residence and home related records 2. Public records related to taxes you may pay 3. Any criminal records that may be available 4. References to places you have worked or gone to school 5. Credit and purchasing information As a caution, only use the minimum information about yourself when conducting these searches. Please do not use your Social Security numbers. However, year of birth, middle names, and places of residence can be used usually with no real risk. In Economic Crimes, Review Chapter 3, "Credit Card Fraud” pages 65-100. (You read this material for your Week Five topic on credit card fraud, but please review for this week, particularly pages 72-76, on identity theft). For the project this week, please do not divulge personal information! Merely tell me what you found in general terms, and where you found it. As an example, if you found your birth date on www.criminal.com, merely state that you found the information there without telling your actual birth date. Thank you. Methodology of Economic Crimes teamwork 11 Week 11: Week Eleven - D: Teamwork You must not copy and paste information. Do not copy or paste information / Please ……. (In your own words, referencing) Your own words, referencing In this unit, we will look, in - depth, into hight tech financial crimes. The main issue we will look at this unit are credit crimes. Credit cards have become a tremendous tool for average citizens and companies, as they provide needed funds when money is ti ght. In fact, I started a business with a credit card.