<p>“I think the losses are factored into the rates and economics as unavoidable costs.”</p>
<p>The rates in this case include the rate the merchant pays for the transaction. If the fraud history of the merchant is bad, they will pay more. If it is good, they pay less. Merchants pay less for debit card transactions than credit card transactions.</p>
<p>Mini-primer on credit card theft such as has been described on this thread:
The mag stripe on the back of the card contains more information than just your acct number. It includes all the information needed to create a duplicate card: acct, name, expiration. (Pin numbers are NOT present on the mag stripe.)
A thief will typically use a [portable</a> mag stripe reader](<a href=“http://www.e-scan.com/profiles/msr306.htm]portable”>http://www.e-scan.com/profiles/msr306.htm) that reads the information on your card and records it. An unscrupulous employee can do this in seconds, unnoticed, in addition to the normal processing of the card for authorization. The merchant probably knows nothing about the theft of the mag stripe info.
Using the mag stripe data a duplicate card can be made by someone who has the equipment to do so.
The duplicated card is then used to make fraudulent purchases.</p>
<p>For debit cards, the pin number that you enter is encrypted by the keypad itself before being transmitted for authorization. These transactions are very safe unless someone is shoulder surfing.</p>
<p>(I’m not a thief. I’m on the fraud prevention/detection side of payment card processing.)</p>
<p>The Friday of Memorial Day weekend I get the call from security that someone was attempting to charge something at Best Buy in Miami. Since I am in MD, I assured them that it was not me. They then proceed to review charges made within the last 1/2 hour and sure enough my card was being used all over the US and out of the country. Fortunately my card was cancelled immediately while I was on the phone. Yes it was a debit card so it made for a long weekend, but my credit union was able to credit me back for the charges that came through. All of this was resolved by the following week. I asked the bank if I would ever know who used my card and how they got the numbers, but they said no. I do know that the person who tried to use it at Best Buy was making an online purchase, so hopefully they were dumb enough to put in their real address in the shipping field.</p>
<p>Somemom–
They could have stalled the person at the store while you called your dau. I am gathering from your post that your dau had her cell but not her purse. Seems since YOU are the owner of the card and you were not authorizing the charge, they should have declined the charge. Sad that the store has to eat the loss. They could have caught the crook red-handed.</p>
<p>I agree, the constable met up with the security guard, they had the people on tape and the thieves were known to the police; you would think people could try a little harder to make credit card theft more difficult.</p>
<p>It’s like the insurance companies settling nuisance liability claims, a waste of money, yet cheaper than pursuing legal action.</p>