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How is Fraud Happening?
1. Many fraudulent transactions happening today easily occur because fraudsters collect information
from ATM machines using skimmers which is a device that reads and records all information stored electronically
on the magnetic strip of the ATM card. With a little mechanical tampering, thieves can gather account
details and PIN number in seconds then use them to either produce a clone card or simply shop online.
2. ATM machines however are not the only means fraudsters use to steal your money. Skimmers are also
often used in the travel and entertainment industries where it is easy for fraudsters who work in hotels
or restaurants to obtain your card and skim them to collect your data. These devices are readily available
to anyone on the internet for about 100 dollars.
3. Internet card fraud is very common and makes it easy for hackers to obtain your card number and security
codes via a virus called a ‘keylogger’ that records every key stroke you make.
4. Carding is when hackers
know the “luhn digit algorithm” which is a simple program, that can be excel-based, hat generates valid
card numbers. Hackers usually have a list of issuing bank's bin numbers (first 4 digits of the card)
as well as ranges of numbers of usually the 5th to 8th digits of the card number) of HIGH END accounts
such as platinum, gold, etc.
What are banks doing about fraud?
Some countries have upgraded to chip and pin. But not all banks have taken up chip and pin, most notably
banks in the United States and fraudsters have overcome the SDA chip technology a long time ago.
Even in the scenario that all cards in the world are chip and pin and the magnetic stripe is removed
from all cards, this will not decrease fraud for card-not-present transactions.
Banks sometimes use transaction risk scoring which predicts the legitimacy of a card transaction based
on the cardholder’s spending pattern. Smart E-Switch works in the same way as these systems. The only
difference is that Smart E-Switch enables cardholders to signal their own spending activity and set
their own blocking limits.
Will fraudsters ever be able to beat the CardSwitch systems?
One possible way is if a fraudster can pretend to be the cardholder and unlocks the card account. However
it is very difficult to do this since we offer a strong multi-factor authentication (for logging in)
as part of our solution.
It is also very difficult to manipulate our solution because the CardSwitch technology never publishes
all the 16 digits of a card number, so even if a bank customer service representative helps a cardholder
to lock/unlock the card, the bank customer service representative will never get the entire number from
the secure CardSwitch system.
In fact, CardSwitch allows the cardholder to use a 'nickname' for his card account that will only be
known to the cardholder.
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