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The convenience of using credit cards has spawned associated security problems that are the headache for both consumers and card issuers. The easy way these cards are used is precisely what opens up the potential for fraud. Using the credit card is premised on the secure privacy of the credit card number and the personal datasheet behind the account. Security is compromised everytime a transaction is made where the credit card is swiped on a POS terminal and its coded numbers are read. The low security of the credit card system makes it vulnerable to fraud which is open on at least three fronts. § First, the retailers who capture credit card information have been known to be an easy source for fraud. Some unscrupulous sales floor people can easily retain this information to process fraudulent purchases. § Second are online transactions over non-secure systems that are open to hackers capturing credit card information as they are transmitted for verification checks. § Third, lost and stolen cards present the best window for fraud. This opportunity has created a black market for stolen credit card numbers that are used quickly before the cards are reported lost to their issuing banks. However, there is only so much a user can do with the credit card if only the card number is available. Merchants may accept credit card numbers with no verification for cardholder data, but the delivery address will be recorded. The credit card thief must ensure the goods fraudulently bought are delivered to a fictitious address he can collect anonymously. Some merchants accept a credit card number for in-store card-not-present purchases, but many require the card itself to be present, and require the cardholder signature or personal identification number or PIN. A lost or stolen card can be cancelled, and if done in time, no fraud can be committed. The FBI and the US Postal Inspection Services are the government agencies tasked with combating credit card frauds. But prosecution is often initiated for frauds committed involving $5000 and above. The bureaus are constrained by limited resources to pursue all criminals. The credit card companies have started to enhance the security features of their card and the system behind it. But they can only go so far as fraud prevention is expensive. The credit card industry has realized that and it has adopted security features hoping that fraud is reduced to manageable levels.
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