Credit card fraud on the rise

FOR most businesses in the retail sector, credit cards are a fact of life. Unfortunately, so is card-related fraud.

For a long time, credit card fraud has been low in Australia, compared with similar countries, but there are signs that it is on the rise.

According to the Australian Payments Clearing Association, 16.7 transactions out of every 100,000 using credit cards last year were fraudulent, up from 14.8 per 100,000 the previous year. But a remedy might be in sight, with the banks recently beginning planning for the introduction of a system called "chip and PIN" that promises improved security.

The new generation of cards will mean that instead of the customer signing a receipt to say they have paid for their goods, they will have to enter a four-digit Personal Identification Number (PIN), as for an Eftpos transaction. The chip in the card will contain encrypted information that will help to determine if the card is genuine, and will verify the PIN.

The aim of the technology behind the system is to ensure that the person using the card is the legitimate owner. The chip has enough memory space to eventually accommodate other information to improve security as well, such as biometric identifiers.

But the introduction of this technology does not signal the end of card fraud, according to Carl Clump, CEO of international e-commerce security firm Retail Decisions, who points to the British experience as a useful guide for Australia.

"The UK introduced chip and PIN-style security measures for credit cards several years ago, so that a numerical password was needed for face-to-face purchases," he says.

"Even before the new system was in place, we saw fraudsters migrating to e-commerce, where all that is needed is the card number and other information on the card itself.

"We believe that fraudsters in Australia are already moving the same way they did in Europe. Credit card fraud is big business, international in reach and highly mobile in outlook. The key players are very smart, and are always looking for weaknesses."

Customer-not-present, or CNP, fraud requires only the card number, and the big targets are sales by telephone, websites or TV. Card numbers are obtained by theft of cards, illegal copying of the numbers by a low-level employee in a retailer, or hacking directly into the computer networks of banks. A new trend, however, is criminals attaching card number "skimmers" (which can be easily bought over the web) to Automatic Teller Machines.

Several Australian banks have already seen their ATMs attacked in this way. Last year, a gang of Swedish fraudsters broke into an Ikea store and secretly installed skimmers on the cash registers.

Traditionally, the main targets for online card fraud have been high-value items such as plasma TVs, computers, iPods and mobile phones. However, in the past few years fraudsters have widened their net.

"We recently saw a case in the UK involving large quantities of disposable nappies that had been bought online with fraudulent card numbers," Clump says.

He also points to store gift cards as another common target for CNP fraud, especially the cards of large chains offered through websites.

"Some retailers are very wary of international credit cards," Clump says. "They sometimes respond by simply refusing to accept online transactions using cards from other countries. That's not necessarily the right thing to do. The real answer is to use methods that focus on identifying suspect numbers."

Clump's company offers a subscription-based service call ReD Shield to combat CNP fraud, integrating databases of lost or stolen cards, "warm" or suspect numbers, and sophisticated mathematical analysis. The system provides updates on emerging scams and new targets for organised fraud.
news source : http://www.news.com.au/business/story/0,23636,23444881-14327,00.html

Credit card payments taking off

About three months since they were first accepted, credit card payments at District Justice Richard E. Martin's office have surged in popularity.

"Not a day goes by when there aren't credit card sales," said Patty Albright, Martin's office manager.

She said $3,130 in January was paid with credit, which includes the 3 percent fee added to each credit card transaction. In February, it was $5,450, she said.

So far this month, there has been about $2,500 paid with credit cards.

In December, the county began accepting credit cards at Martin's office to address increasing demands for credit payments at some district justice offices.

"It's mostly citizens who have traffic citations who ask to pay by credit card," said Freya Sponseller, manager for District Justice Dwayne A. Dubs' office in Hanover, where credit card payments are expected to be implemented in mid-April.

Despite the demand, the county resisted providing the service because it had trouble finding a provider that would not charge the county.

The 3 percent fee prevents taxpayers from paying for operating costs.

Martin's office accepts MasterCard and Visa, and it uses a swipe format similar to machines found in grocery stores, restaurants and shops.

The results were better than the office imagined, Albright said, even though clerks were uncertain if people were open to paying the added charge. Most have been willing to pay more money for the convenience of credit, she said.planned, the payment system will expand to five other district justice offices in the county.

news source : http://ydr.inyork.com/ci_8686317

Alitalia seeks 300 mln eur govt credit line UPDATE

(Updating with Italian politicians' reactions)
MILAN, Mar. 17, 2008 (Thomson Financial delivered by Newstex) -- Italian state-owned carrier Alitalia SpA said it has asked for, and expects to receive from the government, a 300 mln eur credit line that it will repay immediately after its planned capital hike.

In a statement overnight, Alitalia said it expects Air France-KLM's (NYSE:AKH WS) (OOTC:AFLYY) offer to acquire the airline to be launched by the end of June.

Yesterday, the board of Alitalia approved Air France's offer, which is subject to a series of conditions including obtaining the credit line, which will have to be fulfilled by the end of the month.

After these conditions are met, and if in the meantime no 'material adverse change' and other constraints emerge, Air France will launch its bid, which values the state-controlled carrier far below its market price.

Before being launched, the offer will also require EU antitrust clearance.

Air France will offer one share for every 160 Alitalia shares, valuing the company at 139 mln eur, or 0.10 eur per share. This is below Friday's closing price of 0.541 eur and expectations for 0.22-0.23 eur.

In addition, Air France will also bid for 100 pct of the airline's convertible bonds at about 608 mln eur, or 0.3145 eur per bond, in line with Friday's market price, bringing the total potential outlay to 747 mln.

The Italian state, which holds 49.9 pct of Alitalia, will have a 2-3 pct stake in the combined group, reports said.

Following the successful completion of the offers, Alitalia will launch a 1 bln eur rights issue that will be fully guaranteed by Air France.

Italian newspapers said to make Alitalia competitive from 2011, Air France plans to cut Alitalia's passenger capacity by 10 pct, cut its fleet to 137 planes from 185, exit from the cargo segment, and invest 850 mln eur.

According to the reports, Air France plans 1,600 layoffs out of 11,000 people at Alitalia's flight operations AZ Fly and transfer to state holding company 4,500 to 5,100 employees of Alitalia's 49 pct service operations affiliate AZ Servizi.

Trade union approval is among the conditions to validate Air France's offer.

Newspapers said Air France's and Alitalia's heads Jean-Cyril Spinetta and Maurizio Prato will meet tomorrow with Alitalia's nine trade unions.

Newspaper said the unions were very critical towards Air France's offer, with pilots union ANPAC clearly saying it will not approve the offer unless Air France's plans for Alitalia are changed.

Newspapers said members of the centre-right coalition, which is ahead in latest opinion polls for April's 13-14 general election, are divided over Air France's proposal.

Ex-prime minster Silvio Berlusconi, who leads the centre-right People of Freedom coalition, declined to comment, daily La Repubblica said.

Among other centre-right politicians, Alleanza Nazionale leader Gianfranco Fini said he is positive towards Air France pending decisions by trade unions, while representatives for the Northern League are against, the paper added.

Politicians of the centre-left Democratic Party are reportedly favourable to Air France's offer.

Copyright Thomson Financial News Limited 2008. All rights reserved.

The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
news source : http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-23811967.htm

Credit Cards Are Frothy, Not Bubbly

A month ago, BusinessWeek ran a cover article essentially predicting that credit cards would be the next shoe to drop in our increasingly precarious economy. “The party was paid for with credit cards,” read the magazine’s bold cover line. “The hangover will be a whopper.”

In the article itself, BusinessWeek had anecdotes about rising defaults, weakened credit card securitizations (all of which, by the way, have triple-A ratings, just as their subprime brethren once did), and lower profits for the big credit card banks like JPMorgan Chase and Capital One. American Express has raised its loan loss provisions by 70 percent; Capital One has put $2 billion aside for loan losses, and might need to do more. And on and on.

As for consumers, BusinessWeek had no trouble finding people who were facing suddenly higher interest rates and lower credit limits as the companies began taking measures to hold their losses down. Even bankruptcies are once again on the rise — this despite the tougher bankruptcy law that the banking industry helped pass three years ago. The article ended with a bank analyst saying, “We’re in uncharted territory.”

Yes, we are. As it happens, I spent this week rummaging around the world of credit cards, trying to answer the same question as BusinessWeek. I found my own set of scary statistics, and talked to credible bears who feared the worst. “Is it a ticking time bomb?” asked Sean Egan, co-founder of the independent ratings firm Egan-Jones — and a man who has been prescient about the subprime crisis. “Absolutely.” And I watched, via the Web, a Congressional subcommittee hearing aimed at stopping some credit card abuses that have become rampant.

My initial instinct was also to believe that credit cards would be a rerun of the subprime mess — as consumers got in deeper and deeper trouble, the pain would move up the food chain, affecting Wall Street and the companies as much as Main Street. Capital One would become the credit card version of Countrywide; securities built around credit card receivables would crumble, just like subprime securities.

But what I actually discovered has made me question that assumption, and now I’m not so sure it’ll turn out that way. Which is not to say there aren’t problems with credit cards — or that many credit card users aren’t going to feel a fair amount of pain. They surely are. It’s just that, to a maddening degree, credit card companies will actually do O.K. while the rest of us suffer. Annoying, isn’t it?

news source : http://www.nytimes.com/2008/03/15/business/15nocera.html?ref=business

Credit Cards Are Frothy, Not Bubbly

A month ago, BusinessWeek ran a cover article essentially predicting that credit cards would be the next shoe to drop in our increasingly precarious economy. “The party was paid for with credit cards,” read the magazine’s bold cover line. “The hangover will be a whopper.”

In the article itself, BusinessWeek had anecdotes about rising defaults, weakened credit card securitizations (all of which, by the way, have triple-A ratings, just as their subprime brethren once did), and lower profits for the big credit card banks like JPMorgan Chase and Capital One. American Express has raised its loan loss provisions by 70 percent; Capital One has put $2 billion aside for loan losses, and might need to do more. And on and on.

As for consumers, BusinessWeek had no trouble finding people who were facing suddenly higher interest rates and lower credit limits as the companies began taking measures to hold their losses down. Even bankruptcies are once again on the rise — this despite the tougher bankruptcy law that the banking industry helped pass three years ago. The article ended with a bank analyst saying, “We’re in uncharted territory.”

Yes, we are. As it happens, I spent this week rummaging around the world of credit cards, trying to answer the same question as BusinessWeek. I found my own set of scary statistics, and talked to credible bears who feared the worst. “Is it a ticking time bomb?” asked Sean Egan, co-founder of the independent ratings firm Egan-Jones — and a man who has been prescient about the subprime crisis. “Absolutely.” And I watched, via the Web, a Congressional subcommittee hearing aimed at stopping some credit card abuses that have become rampant.

My initial instinct was also to believe that credit cards would be a rerun of the subprime mess — as consumers got in deeper and deeper trouble, the pain would move up the food chain, affecting Wall Street and the companies as much as Main Street. Capital One would become the credit card version of Countrywide; securities built around credit card receivables would crumble, just like subprime securities.

But what I actually discovered has made me question that assumption, and now I’m not so sure it’ll turn out that way. Which is not to say there aren’t problems with credit cards — or that many credit card users aren’t going to feel a fair amount of pain. They surely are. It’s just that, to a maddening degree, credit card companies will actually do O.K. while the rest of us suffer. Annoying, isn’t it?

news source : http://www.nytimes.com/2008/03/15/business/15nocera.html?ref=business

KTC builds niche in tourism

CHIANG MAI : The consumer credit giant Krungthai Card is confident that it can successfully build on its leadership in the niche market for tourism and wedding credit cards.

The company, a unit of Krung Thai Bank, is spending 45 million baht in marketing activities in the first quarter, 20 million of which is going to its International Balloon Wedding Fair, a special campaign held over this past weekend in Chiang Mai in co-operation with MasterCard.

KTC plans to stage similar travel and wedding fairs later this year to build up its leadership in the segment.

''It's our first step to becoming the leader in credit cards tied with weddings,'' said Staporn Sirishinha, a KTC senior executive vice-president for leisure marketing.

He noted that card spending at the International Travel Fair last month was 200 million baht, or up tenfold from the previous year. Visitors increased fourfold to 400,000. Sponsorships and promotions at special fairs and exhibitions represent a key strategic initiative for KTC.

KTC reported 2007 net profit of 521 million baht, up 19% from 2006. Revenue rose 32% to 10.7 billion baht. Its member base rose 10% to 1.94 million accounts, including 1.46 million credit cards.

Meanwhile, Thawatchai Thitisakdiskul, another KTC senior executive vice-president, said the Bank of Thailand should be more flexible on current interest rate restrictions on consumer credit companies to help boost market competition.

The central bank currently caps interest rates for credit cards at 20% per year and personal loans at 28%.

But consumer finance operators say the caps only limit their ability to set pricing based on risk and result in many low-income consumers being cut off from credit.

Many turn to underground lenders who charge usurious interest rates.

news source : http://www.bangkokpost.com/Business/10Mar2008_biz35.php

Shares Tumble as Credit Worries Worsen

The decline in the market that started Thursday morning in Europe and accelerated in New York hit the Asian markets hard in early trading Friday.

Tokyo was down 3.30 percent at noon, reaching a six-week low, while markets in Hong Kong and Sydney were trading down more than 3 percent, setting the stage for what was shaping up to be a difficult day across Asia. Other markets, including Taiwan and Shanghai, were all opening lower.

The declines came amid renewed anxiety about the availability of bank loans — and fears that the Federal Reserve in Washington may be unable to curb the credit slump.

In New York trading, the broad Standard & Poor’s 500-stock index dropped 2.2 percent, or 29.36 points, reaching its lowest close since September 2006. The index, which closed at 1,304.34, is off more than 16 percent from its peak last fall.

Shares of financial services firms led the sell-off, which spread to every major sector of the market. Investors were unnerved by high-profile loan defaults at Carlyle Capital, an investment firm based in Guernsey, Channel Islands, that handles $21.7 billion in assets.

It was a double-barreled bit of bad news. The assets of Carlyle have lost value in recent months, to the point where the firm cannot pay back some loans. And the fact that the banks called in the money in the first place suggests they are anxious about maintaining the size of their credit lines.That touched off fears among investors, who sent the Dow Jones industrial average down 214.60 points, or 1.75 percent, to 12,040.39. All but one of the Dow components declined.

The Nasdaq composite index fell 52.31 points, or 2.3 percent, to 2,220.50.

Yields on agency mortgage-backed securities rose to their highest level relative to Treasuries in 22 years.

Investors were also discouraged by strong inflationary signals from the commodity and currency markets. Crude oil settled at another record, $105.47 a barrel, up 95 cents, or 0.9 percent. The euro hit another record against the dollar at $1.5370, before falling back to $1.5365, after European central banks chose to hold interest rates steady.

The yields on 10-year Treasury notes, which move in the opposite direction from the price, fell as investors rushed into government bonds. The price rose 23/32, to 99 10/32. The yield declined to 3.58 percent, from 3.67 percent.

The credit market troubles arrived on the day of a report that home foreclosures reached a record in 2007. The percentage of loans past due or in foreclosure jumped to 7.9 percent at the end of last year. Before the third quarter, the rate had never risen above 7 percent since records began in 1979.

Investors may also be looking ahead to Friday’s employment report from the Labor Department, considered the most important indicator of the nation’s economic health. Economists have predicted that payrolls rose by 25,000 jobs in February.

“Anything that is less than on target could throw Wall Street over the edge,” said Sam Stovall, chief investment strategist at Standard & Poor’s.

The 2.2 percent decline in the S.& P. 500 means that the index has lost $2.39 trillion in value in 103 trading days, according to Howard Silverblatt, an analyst of the index.

news source : http://www.nytimes.com/2008/03/07/business/worldbusiness/08stox-web.html?ref=worldbusiness

Only a fool would use a credit card to invest

sk the Fool: Why shouldn’t I borrow against my credit card and invest in the stock market? – K.L., via e-mail

A: Danger, Will Robinson! The U.S. stock market has, over decades, averaged about 10 percent per year in returns. But that’s an average. In some years, it loses money – such as 9 percent in 2000, 12 percent in 2001 and 22 percent in 2002. (This was followed by a 28 percent gain in 2003 and an 11 percent gain in 2004.) Meanwhile, credit cards were recently charging an average rate of about 13 percent to 14 percent. So overall, in the long run, you’re likely to lose more than you gain if you try to make money in stocks while forfeiting money to credit card issuers.

Ask the Fool: What does “UIT” stand for? – Liz, via e-mail

A: It’s a unit investment trust, invested in a relatively fixed portfolio of securities (such as, say, five or 20 stocks or bonds), with no investment manager buying and selling holdings throughout its life. The UIT components are held until the trust is liquidated at a predetermined date in the future – which could be several or many years down the road. Investors who want to trade shares of UITs before they mature can often do so on the secondary market.

Unlike a mutual fund, UIT share prices in the secondary market may be priced above or below the net asset value of the trust’s actual holdings. When you buy shares of UITs, you typically pay a sales fee, or load, of around 4 or 5 percent. But you should note that many mutual funds carry no sales loads at all.

My dumbest investment: Lord, grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference. This means don’t invest in things you don’t know much about. I made a real estate investment in a marginal property and lost hundreds of thousands of dollars. It makes every mistake I ever made in the stock market appear trivial. Blind faith, hunches, and the assumption that there is a solution to every problem are what lead people into financial disasters. You must know your limitations and not fall prey to gimmicks, fads or addictions. – A.M., Honolulu

The Fool Responds: You’re right. Hunches and assumptions can sink us financially. They can sink us in stocks, too, when we blindly act on a hot stock tip or assume that just because a product is popular, that its company’s stock will go through the roof. (The stock might already be overpriced.) It’s best to take the time to learn all about investing before jumping into things that seem too good to be true. You might start at

Foolish trivia: I was founded in Chicago in 1918 by a 22-year-old who rented out a dozen Model T Fords. I was later owned by General Motors, RCA, United Airlines and Ford. Today, I’m the world’s largest general-use car rental brand and the No. 1 airport car rental brand. I had 1,000 locations by 1955, and today they number nearly 8,000 in 145 nations. I now offer hourly rentals, as well as a “Green Collection” line of energy-efficient hybrid vehicles. I operate a top American equipment rental business. In 1994, I stopped using my most well-known celebrity endorser. Who am I?

Answer to last week’s trivia: Founded in 1923, my business stems from the mammal mus musculus, cousin of Speedy, Mighty, Jerry, Danger, Fievel, Itchy and Motor. Many people, especially small ones, think I’m supercalifragilisticexpialidocious. I opened my first park in 1955 and now operate a bunch in the U.S., France, Japan and Hong Kong. I’m the second-biggest media conglomerate in the world, with four major business segments: studio entertainment, parks and resorts, consumer products, and media networks. My brand names include Pixar, Miramax and ESPN. My main TV network is easy as 1-2-3. I built a utopian city in Celebration, Fla.

Who am I? Answer: Walt Disney Co.

The Motley Fool take: The Shanghai stock market, as measured by the Shanghai Composite Index, was recently up a whopping 70 percent, year over year.

China’s market has cooled, but it’s still unquestionably hot. While China’s economic growth is very real, so was the growth of the Internet nearly a decade ago – and that turned out very, very badly.

China will likely have a stronger and more impressive economy a decade from now, but there are signs of inflation as well as signs that the country might have to moderate its growth to conserve one of the most basic resources we all take for granted: water.

In other words, the balance of risk and reward is now better in other developing economies – ones that haven’t seen their markets triple in a few short years. Look at Mexico, Brazil and Chile, for example, as they offer above-average growth potential and plenty of intriguing opportunities.

No matter how bright the future, investors must take a pass when valuations become unfavorable – as they have in China. Fortunately, we have the rest of the world to look to for bargains, and now is a promising time to get going.

The Motley Fool is written by Tom and David Gardner for Universal Press Syndicate. The name comes from Shakespeare’s “As You Like It” and the Elizabethan days, when fools were the only people who could get away with telling the truth to the king or queen.

What do you know about Warren Buffett, one of the world’s richest people? Probably not enough.

Born and raised mostly in Omaha, Neb., Buffett was fascinated by the stock market from a very early age. He bought his first shares of stock at the age of 11, making mistakes and losing some money along the way, as every investor does. But he kept learning and applying what he learned. He had $9,000 in the bank when he graduated from high school. (Adjusted for inflation, that’s more than $90,000 in today’s dollars.)

Today Buffett heads up Berkshire Hathaway, a company he built with his partner, Charlie Munger. It has made many people very rich, and it is actually a collection of many smaller companies that Buffett bought in their entirety, such as Dairy Queen, GEICO, Fruit of the Loom, Benjamin Moore, See’s Candies, Executive Jet, FlightSafety, Nebraska Furniture Mart, The Pampered Chef and the Buffalo News (a newspaper company).

He also owns big and small chunks of many other companies, having bought their stock. As of the end of 2006, for example, Berkshire Hathaway owned sizable portions of American Express, Coca-Cola, Procter & Gamble, The Washington Post, Anheuser-Busch, Johnson & Johnson and Wells Fargo.

How has Buffett done? Well, remember that the stock market on average has grown by about 10 percent per year, on average. Meanwhile, Buffett’s company has grown by more than 21 percent per year, on average, since 1965, and is now worth more than $200 billion (a fifth of a trillion dollars). Ten thousand dollars invested with Buffett in 1965 has grown to be worth more than $36 million. Buffett is leaving most of his own tens of billions to charity.

news source : http://www.thenewstribune.com/business/story/298386.html