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2007-07-24 01:55:55

Credit card deals - Charity's New Source of Income?

Have you ever wondered about the source of a certain item in your credit statement? It is often hard to keep an eye on your credit card account unless you monitor it online on a daily basis. Although banks are implementing a lot of counter measures to provide maximum security for their customers, thieves are coming up with new ways of stealing and checking the cards. The latest method used by criminals to see whether a credit card is active or not involves donations to charities.

But don't get it wrong. Such donations are not signs of a good will. Credit card thieves use such transactions to verify that the card is still active. They usually donate small amounts not to raise suspicion and not to use up the credit card limit. The amount depends on the buying habit of a card owner, so that the banks won't be able to identify and mark such transactions as illegal.

The method that has been used before doesn't differ much from the current scheme. The process is similar in a way that there is a little chance that someone can spot you in case if the card comes up canceled.

One of the most popular ways of checking whether the card is active was to charge a tiny amount to the account on the gas station. Now that the credit companies have come up with new ways of identifying and blocking fraudulent transactions, criminals have switched towards online charitable organizations who can't always afford to implement modern security systems.

In a scenario where a thief has acquired your credit card number and the charitable transaction is confirmed, the next item on your credit statement might be worth much more. You might end up paying for goods that are worth hundreds or thousands of dollars or your credit card information can be sold overseas, leaving you fewer chances to use it ever again.

But problems don't stop here. Now that the bank's security department sees an increased illegal activity in charity sector, they might start blocking legitimate transactions. This causes a negative effect on the charity industry and raises some moral issues. For example, you might end up contributing money to a charity you do not support (e.g. anti-abortion organizations). Besides that, once the transaction to charity is made, you might not be against it, given that you can include it on your tax report. Moreover, charities often do not have resources to take actions against illegal donations. As a proof of a damage made to charities, Red Cross has reported that it had to return nearly US$7000.

A recent study made by a security company has shown that credit card numbers are often traded on the internet and sold for $1 to $12 per card. In fact, the process of checking the legitimacy of a card has become so important that the thieves have written a program that asks for a credit card number and then automatically makes a small transaction.

One other thing to remember is that once you deal with a credit fraud, and there is no credit to repay, you will be most likely advised to close your current account and apply for a new one. But do not worry it will not damage your credit history. Moreover, according to Federal Trade Commission, once you report the loss or theft, you have no further responsibility for unauthorized charges. In any event, your maximum liability under federal law is $50 per card. Since this type of crime is likely to grow, we can only note that at least some money is going for a good cause. As a matter of fact, someone's illegal transaction may end up saving someone's life.