Wednesday, December 13, 2023

Fraud Protections

A few months ago, a fake Chinese company charged our non-fake credit card for a fake product that we did not order in the first place, nor did we ever receive.

We went through the relatively simple process of disputing the charge, and one or two billing cycles later, the charge amount was credited back to the card.

Since I got my first credit card in college – which I applied for on the beach (I am not making that up) – I have had numerous similar situations. About thirty years ago, my credit card, tucked safely in my wallet in California, purchased $600 worth of electronics inside an Alabama Walmart. And so on, and so forth. I’m sure it’s happened to you more than once.

In all that time, with all those fun little cases of fraud, I have never been out a single dime of my own money. The credit card companies always just wipe it from my bill. What I don’t understand about the whole process is who makes money from this? (I mean besides the criminals, of course.)

Think about it. This is 2023. We can buy something on Amazon and have it arrive at our door the same day. We have smartphones that can do everything except cook you breakfast, but there’s an app that can have breakfast delivered to you from your favorite place. We don’t have flying cars yet, like we were promised in our youth, but we do have Teslas that can make fart noises sound like they’re coming from individual seats, and that’s almost better.

Nothing is impossible anymore, when it comes to technology, but we still have credit card fraud. That means credit card fraud is beneficial to someone other than the criminals, or it wouldn’t exist.

Case in point – the credit card chip. Years ago, we all got new cards in the mail that had the chip. Do you know what the chip was for? The chip is the thing that makes it possible to have a unique, user-chosen PIN for your credit card. Any time you wanted to buy something with that credit card, you would have to enter your personal identification number that only you, your spouse, and that post-it note at home know about.

We already all do it with our ATM cards. So, how many of you have a PIN for your credit card? That’s correct. Exactly zero of you. Hmm…

The PIN makes credit card fraud much more difficult, so what did they do instead? They put RFID chips in the cards, next to the useless PIN chips, so that we can all “Tap to Pay.” You no longer need to go through the “unhygienic” process of inserting your credit card into the card reader to use the useless PIN chip. Now you can just wave your card near the gas pump to pay.

OK, marginally more convenient, but still not preventing fraud. How about the grocery store? When was the last time anyone asked to see your ID when using your credit card? That time-honored fraud prevention technique has been abandoned almost wholesale.

A long time ago, the gas stations started asking for your ZIP code at the pumps. Well, that’s nice and all, but if I stole this card from you, it’s not going to exactly be rocket science to figure out your ZIP code. (Even for someone who has their life together enough to steal credit cards to buy gas.)

It was at least something, but then along the way, quite a few gas stations stopped having the pump ask for your ZIP code. I even ran into a gas pump this past weekend that said on the screen after I tapped my card on the RFID reader, “To prevent fraud, enter zip code.” In addition to the keypad, over on the right side of the screen – and again, I am not making this up – there were two buttons in case I didn’t want to enter my ZIP: Cancel and Skip.

So, to prevent fraud, you’d like more information from me, the legitimate owner of this card, but if I stole this card and I’m here trying to pump some illicit gasoline, I can just hit the handy Skip button and move forward with my crime? Great job, everyone.

So, just looking at gas pumps for a minute, I’m not naïve enough to think that someone who owns a gas station is naïve enough not to understand how to prevent credit card fraud. The “skip our security measures” button is there on purpose. So not preventing credit card fraud is obviously beneficial to their bottom line. Who cares if the card is stolen or not, because I’m still selling the gas. Obviously there are no repercussions from the credit card companies for poor security at the pump. I mean, after all, the credit card companies never activated the PIN system in the first place.

On top of everything else, the more gas (and everything else) I buy, the more money the credit card companies send me back in rewards.

Where’s all this money they can afford to write off and all this money they can afford to give back to me coming from? Do they own a money tree? Are they just super generous? Doubtful.

I mean, I guess they would have plenty of money to throw around if people actually used their credit cards for credit and didn’t pay them off in full each month. But no one is doing that, right?

I mean, who in their right mind would finance a TV at 25%, let alone a cheeseburger?


I mean, that’s just crazy. Almost as crazy as actively avoiding real fraud protections.

Happy holiday shopping, everyone! Be safe – and smart – with your money out there.

See you soon,



Copyright © 2023 Marc Schmatjen


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