Monday, November 10, 2008
Japanese Credit card fraud doubles from 2004
Incidents of online credit card fraud have skyrocketed in the last few years, more than doubling since fiscal 2004 to reach 689 million yen in fiscal 2006, a study by the Ministry of Economy, Trade and Industry (METI) has revealed. Experts have also criticized businesses and the government for poor credit card security practices, pointing out that a transaction will be accepted on some systems even if the cardholder's name is wrong, as long as there is a correct card number and expiry date. The study, which covered six major domestic credit card companies, shows that fraud has risen over the past few years, reaching 311 million yen in fiscal 2004 and 454 million the following year. Internet shopping has shot up over the last 10 years -- reaching 4.391 trillion yen in 2006, compared to 62.5 billion yen in 1998 -- and around half of all transactions are now completed by credit card.
However, credit card-related crime is also rising. During March 2005, credit card information on 698 people was stolen from a Yokohama gas stand, with those of 56 of the victims used for illicit purchases on the Internet. In another incident in Okayama Prefecture in June 2006, a gas stand worker stole credit card information from customers and used it to charge his e-money account on his mobile phone to the tune of 64,000 yen. At the other end of the scale, credit card information on 40 million people, including those of 77,000 Japanese nationals, was lost in June 2005 after a U.S. data processing company server was hacked. Damage caused by subsequent fraudulent use is somewhere around 130 million yen, which is borne by the credit card company. In order to improve credit card security, card companies are pushing a voluntary password system called 3D Secure. However, uptake by both consumers (4.7 percent, as of May 2006) and stores has been slow. A spokesman from METI's Consumer Credit Division said: "3D Secure has to catch on. It shouldn't affect convenience and discourage consumers from using credit cards. But even when taking the damage incurred into account, we've had to leave uptake by businesses on a voluntary basis, since the time isn't ripe for drawing up a legal framework."