Fraudulent transactions on the rise:

No effective mechanism to check credit card frauds

By Lalin Fernandopulle

The number of credit and debit card theft and fraud cases is on the rise in Sri Lana with no effective mechanism in the banking sector to check card theft and fraudulent transactions. A large number of card holders who lost their credit and debit cards have lost enormous amounts of money due to illegal transactions.

Nimal Fernando from Wattala said that that a few days ago he had lost his debit card. An illegal transaction of Rs. 8,500 had been made on the same day he lost his card. He said he came to know about the transaction through the SMS alert he received. Card holders said that though the SMS alert system is good, card holders could lose money from the first transaction after the loss of the card.

Banks say that SMS alerts help check illegal transactions and minimise loss to the card holder.

Credit card division officials said that card holders should inform the bank as soon as they lose their cards. Despite all the safety mechanisms the number of fraudulent transactions is on the rise revealing that the protective mechanisms in operation by the banking sector is not effective.

"Banks should have a PIN number for each card holder to complete a transaction similar to the operation of an ATM card to avert illegal transactions. Comparing the signature at the counter alone is not adequate to stop bogus transactions," a card holder said.

Sujanie Perera, an employee of a leading newspaper, said that a transaction to the tune of Rs 10,000, had been made after she lost her credit card which was due to the absence of a proper protective mechanism to check fraudulent transactions. She said that had there been an effective safety mechanism to check the illegal transaction, she wouldn't have lost money.

Banking experts said that many overseas banks have sophisticated mechanisms such as a PIN number for transactions which leaves no room for illegal transactions.

Credit and debit card users said that while many banks have SMS alerts to inform card users of transactions, certain banks do not yet have a protective mechanism which is vital to trap fraudsters and curb the number of illegal transactions.

Commercial Bank Card Centre sources said that SMS alerts have helped in a large way to minimise fraudulent transactions and ensure the safety of credit and debit cards. The SMS alerts inform card users of transactions within a minute of the completion of the transaction.

'We have not had many instances of card theft or fraudulent transactions. The bank has refunded over 75 percent of illegal transactions depending on the bank's relationship with the customer. Customers have to pay a fee to register," sources said.

Card users have been advised to inform their credit provider when they travel abroad and have some sort of card protection to avoid nasty surprises.

"I use my credit and debit card a lot to make payments as it is convenient. I always notify my bank when I travel abroad to ensure that it does not block the card when I make payments," a card user said.

The use of credit and debit cards as a convenient mode of transaction associated with lifestyle has increased sharply over the years though not as widely as in the West. Supermarkets, department stores, hotels, restaurants and company showrooms and outlets accept credit and debit cards.

Most people don't like to carry a lot of cash, and would prefer to use debit or credit cards even though they may have to pay a certain percentage on top of bills as credit card fee.

Card frauds in Sri Lanka by a group of foreigners were reported last year. The Chennai City Police arrested two Sri Lankan nationals who allegedly cloned credit and debit cards and used them in ATMs. The police nabbed them while they were withdrawing cash. Many banks have security guards at ATMs to ensure safety of customer transactions.

An official of the NDB Bank said that their debit and credit cards have Visa facilities and added that the SMS alerts are protective mechanisms to avert illegal transactions.

"The SMS alert is a protective mechanism which card users should ask for when applying for a card", he said.

Card users should inform the bank or the card centre as soon as they lose the card to enable the bank to cancel it.

Those who travel use credit and debit cards which are used to pay entrance fees, fuel and purchase goods. Card users should also carry a certain amount of cash when they travel to villages where small shops do not accept cards.

Bank of Ceylon Credit Card Division sources said that debit card users have the option to request the bank to permit only cash withdrawal which requires a PIN number, when they lose their cards.

"We have requested customers to inform the bank when they lose their cards to cancel its validity," he said.