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Scam potential: fraud and verifying credit card addresses

Started by LindaC, January 28, 2010, 11:30:04 AM

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We love to use our credit cards. Whether it's our check cards or traditional credit cards, the convenience and ease of using them makes them a favorite method of payment. However, with credit cards comes the inevitability of fraud or attempted fraud. Preventing fraud was a difficult task when purchases were made face to face. This task has become more difficult because more and more purchases are done through the internet or over the phone. This makes it impossible to check an identification card to ensure the purchaser and credit card holder are one and the same. Credit card companies and merchants have developed methods to help prevent credit fraud (click here for details). Address verification is one way in which merchants help to prevent fraud.

When you purchase items on-line, over the phone or through the mail, many merchants will verify the address on your credit card. They use an AVS, address verification service, to help ensure that the person making the purchase is the correct card holder. The AVS checks three parts of the address. It checks the street address, the zip code and the complete address. It then returns a three letter code indicating the validity of the address. The first letter always coincides with the number of the street address. The second letter always coincides with the zip code. The third refers to the complete address. An example is YYY; meaning yes, the address is correct; yes, the zip code is correct; and yes, all parts of the address are correct. If it comes back NYZ, it means that the street address was wrong, the zip was correct, and only the zip was correct. A N means that nothing matched. A code of YYY does not mean that there was no fraud, because some offenders may have access to the mailing address for the credit card.

With these increased security measures, many scams have developed trying to verify the mailing address for your credit card. Sometimes a person will call your house and say "I am from Discover Card. My name is Bob Smith and my id number is 2. I am calling from their fraud prevention department and we noticed some strange activity on your account. Did you purchase an item for $100 from ABC store?" Once you say no, then they will begin to get your information. You may be asked if you want a credit on your account for the item, since you did not purchase it. Bob will then proceed to tell you that they can issue you a credit; however, they need to verify that you are the account holder. He will then proceed to ask you a barrage of questions from address to expiration date. After the call has finished you will have just given the scammer enough information to make purchases on your account.

Other scams include people calling from pretend stores to verify your address for an order, or calling from the credit card company just to ensure they have the correct information. Many of these scams are also predicated through e-mail.

The simplest way to prevent this is to not give out any information if you are unsure why they are requesting that information. If you get a call from your "credit card company," tell them you will call them back. Hang up and call your credit card company to see if it is a valid request. NEVER give out information via e-mail. Credit card companies will not ask you for this information via e-mail. If you have ordered something from a store and they call to verify the address, you can ask to call them back; usually there is a number on the receipt you received. If you want to talk to them now, you can ask them precisely what you ordered to ensure it really is the company.

We may never be free of scammers, but by taking simple steps you can help to protect your credit from people who want to get something for nothing.