More Credit Card Fraud in India, Readers Digest

How safe is your credit card?

Media release, April 28
New Delhi

Your credit card is a hot piece of plastic waiting to be stolen and easily misused at great risk to your finances. That sums up an article in the May issue of Reader’s Digest, published in India by the Living Media Group.

To find out why credit card fraud is growing (from a few stray cases in the early 1990s to an estimated Rs15 crores last year), a Reader’s Digest team – comprising a male senior staff editor and two women – “illegally” used each other’s credit cards at restaurants, supermarkets, bookshops, petrol pumps, and other places shopping 25 times in all. They used the cards in two cities, Mumbai and Trivandrum (one big, one small) and got away 20 times out of the 25 despite using wrong-gender-photo cards, never forging each other’s signatures and never shopping together. Photo cards were used in 20 of the 25 purchases, ranging from a Rs250 Parker pen to a Rs15,240 IFB washing machine. The male editor also bought his Mumbai-Trivandrum return air-ticket using a woman’s photo card. (Indeed, Reader’s Digest paid for all the purchases.)

To find out whether cards with photos offered any additional security, they also used credit cards with no photos on 5 of the 25 occasions. Not once were they caught – so, they conclude, a card with a photo is better than no photo at all. The Reader’s Digest article says that if credit card fraud is growing rapidly, it’s chiefly because merchants are lax everywhere. They do not follow procedure and often fail to check photos and signatures on cards. But why should they care? Merchants are not held accountable by card-issuing banks when a fraud occurs. Instead, the credit card industry finds it easier to punish the individual consumer by making the cardholder pay up for any loss.

Banks do not want to upset merchants, because commissions from merchants are significant and fast-growing. To make matters worse, banks and card-issuers do not provide any limited liability to the cardholder as they do in the US, Canada, Europe and many other countries including South Korea, New Zealand and Mexico, where tough consumer laws protect cardholders. Even foreign credit cards used in India get such protection, but Indian cardholders have been denied any such facility.

The Reader’s Digest team got caught only on 5 of the 25 occasions. But when that happened they explained their purpose and interviewed the merchants. Three of the five merchants (a gold shop in Trivandrum; a restaurant and a gifts shop, both in Mumbai) had been penalized earlier for not checking signatures on foreign cards, and so they became careful.

For further information, please contact:
Mohan Sivanand,
Mobile: 9870148533