Algorithms for the Masses by Julian M Bucknall

We came home after a relaxing week-long visit to England to find that my direct debit to our gym was bounced by my Wells Fargo credit card. I logged on to my account on the bank's website to find that someone in Atlanta, GA, had been "using" my credit card to rack up about $7,000 in charges, all within a couple of hours on the day we flew out of Denver. I was at 38,000 ft when the fraud occurred. The charges had triggered the automated fraud system, and Wells Fargo put a hold on the card. From which, of course, automatic debit transactions started failing including the one for the gym.

(The story so far is bittersweet: every time I try to use my Wells Fargo credit card outside the US, it's automatically refused and the card is put on hold. I have to remember to phone them before I travel to tell them that I'll be using it outside the country so that this doesn't happen. I'd forgotten to do that this particular trip.)

I phoned up a very nice lady in the fraud department at Wells Fargo, sorted out which charges were fraudulent, and she then cancelled the card completely. They'll be sending me a new card in a few days with a new account number and transfer all the valid charges to it. I am grateful that I didn't get the third degree about who had access to my credit card, and was it possible that someone could have used it without my knowledge? (I kid you not, but this happened with US Bank when I saw fraudulent charges on that last year.)

Anyway, this isn't particularly about that. It's about what went wrong. I'm guessing that these charges were made with a fraudulent physical card, the magnetic stripe on mine had been copied and then transferred. I'm assuming "physical" since most if not all online stores require the CVV (that 3-digit number printed on the back) and mine has worn away and is illegible (I keep my cards in my wallet in the back pocket and, let's just say, it's a hostile environment...). I don't use this card for online purchases at all. So, someone duped the card and eventually used it in an orgy of purchases until it was locked out.

The interesting thing for me is that I'd just been to England where all credit cards are smart cards with those little chips embedded in them. The same for Europe as a whole, for that matter. It's not easy to dupe such a card, not only for that particular reason but for the additional one that when you pay for things, say a meal in a restaurant, you have the card in sight at all times. The waiter will come to the table with a wireless card reader that will debit your card there and then: you put the card in the device, chip first to allow the machine to validate the chip, and then type the PIN, and the transaction goes through.

Why this technology is not available in the US, I have no idea. Certainly, the credit cards are more expensive to produce and program (and the merchants' readers would all have to be changed too), but compared to losses due to physical fraud I'd have though it would be worthwhile. Of course, this does nothing to alleviate online credit card fraud where no physical card is present.

The other thought I have is that, despite considering myself to be a careful credit card user, I've now been defrauded on two separate occasions within the past 13 months. (The last time was using a duped card too, in a gas station to get fuel.) Am I unusual? If not, then no wonder credit card interest rates are so high — the banks have to pay for the frauds from using unsecure systems.

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