Fighting credit card fraud, one GPS coordinate at a time

Samantha Rose Hunt
01 June 2009, 3:40 PM


Mobile phones beaming their owners' locations back to banks could dramatically cut credit card fraud, Ericsson says.


In 2007, nearly 40 percent of the $845 million in fraudulent transactions on UK cards was done overseas according to APACS, a payment card trade association from the United Kingdom.

When individuals travel to countries which banks consider to be “high-risk” for fraud, their cards could be blocked, and said individuals left with an inability to access money. Not only can this be inconvenient and embarrassing but it could potentially be dangerous. A new service by Ericsson, IPX Country Lookup, would be compatible with GSM networks and would deliver location information (country only, and not exact location) from an individual’s mobile phone to confirm that the use of the card was legitimate.

For the service to be effective, the technology would have to be installed on a wireless provider’s network. After it was installed a fee would be paid to the provider each time a transaction was verified via the GPS location of the mobile phone.  The service would still work regardless of whether or not a person had their phone turned off, as long as they had powered the device on at least once while in a foreign country, so that registration with the local network operator could occur.


Ericsson says people would need to give consent to their bank prior to using the transaction verification service, and also allayed privacy concerns by saying location data would not be stored, but rather, used only to verify the validity of the transaction at the time.

Banks would be able to tailor the service with their own policies and procedures. For instance- if a bank only wanted to use the service in specific countries which it deemed high risk like Russia, Romania or China, they would be able to do that.

Meanwhile, Aussie banks are allowing consumers to lock down their online account access in the face of rising fraud. National Australia Bank now allows people to 'lock' their internet banking account, so it can't be accessed even if the right username and password are entered. To unlock the account, the customer has to ring telephone banking and enter a different username and password, then unlock the account.

Commonwealth Bank's new mobile phone browser internet banking service also only allows transfers to people who you've transferred money to previously on your regular computer internet banking, a measure which banking executives frankly admitted was partly intended to stop mobile phone internet banking muggings, where a person could be forced at gunpoint to log in to their internet banking and hand over their phone to a thief.


Post your comment



Comments

RSS feed Email alert

Goodidea (New user):

Fraud crimes will continue to grow until banks make outdated signature and PIN systems reliable by exploiting proposed ID KEY system. Fake documents have made signature system unreliable while micro cameras and micro contact sensors have made PIN system unreliable.

ID KEY system proposed on website www.xwave.co.uk will provide ID sticker to make signature reliable and Card Key Code required to activate transaction will make PIN system reliable.


This shows that along with the fraudsters courts should prosecute banks for not exploiting proposed system which will deter such fraud crimes.


01 June 2009, 5:19 PM (4 years ago)report abuse Send to a friend reply

The Big Baboo (New user):

I like it :) I strongly support that idea :) I only use my credit card online for the odd concert ticket purchase but I agree with you that the
whole authentication process needs to be up-dated. And I definitely don't like it when a bank sends you a new card through the post.I mean anybody could just pick it up and start using it.

02 June 2009, 2:35 PM (4 years ago)report abuse Send to a friend reply

Dan Warne (Regular user):

Yeah, that is surprising isn't it. The bank once sent a whole batch of new cards for me and my wife to an old address they had on file for me, even though I'd advised them of my new address. I guess they had some out-of-sync databases. What was worse was they sent the cards TWICE to the wrong address, because they didn't see the problem when I called the first time to say I hadn't received them. Some banks really do seem quite lax... my current bank, for example, just sends out the cards ready to use, with a blank signature panel. When I used to be with ANZ, they had better procedures -- you had to ring up to 'activate' the card by answering some security questions before it could be used. Of course, they used the opportunity to pressure-sell credit card insurance and so on to you, which was very annoying.

This idea outlined in the article sounds like a sensible and good one, though. The security around credit cards is pathetic -- and apparently the cost of fraudulent transactions is put back on the retailers, who obviously have to amortize that cost across retail prices. If the risk was borne by the banks, I think we can be pretty sure that they'd fix the problem quick smart.

I mean, some credit cards have had chips in them for a decade now, and Australia STILL hasn't implemented a uniform chip-reader scheme at point of sale. Pathetic!!

Basically, there is -no- security at credit card point of sale -- very few checkout staff check the signature panel on the back, and even if they gave it a cursory glance, it's unlikely they'd pick up a forged signature. Basically, it's a numbers game that the bank plays -- if it's cheaper for retailers to pay for the fraud than for the bank to fix the problem, then that suits them fine.

02 June 2009, 3:48 PM (4 years ago)report abuse Send to a friend reply

The Big Baboo (New user):

Quoting Dan Warne:
I mean, some credit cards have had chips in them for a decade now, and Australia STILL hasn't implemented a uniform chip-reader scheme at point of sale. Pathetic!!

Hi Dan :) Yea my current bank is currently involved with a merger with Bendigo Bank and seeing the stuff-ups they're making just with simple passbook entries :( I shudder to think what's going to happen when my credit card comes up for renewal next year :'(



04 June 2009, 11:52 AM (4 years ago)report abuse Send to a friend reply

anonymous user Anonymous user