Credit card fraud in Trinidad and Tobago
| Pages | 340-359 |
| Published date | 24 July 2007 |
| Date | 24 July 2007 |
| DOI | https://doi.org/10.1108/13590790710758521 |
| Author | Dave Arthur Williams |
| Subject Matter | Accounting & finance |
Credit card fraud in
Trinidad and Tobago
Dave Arthur Williams
DAWILL Law Academy and Consultancy Services Limited,
Trinidad and Tobago
Abstract
Purpose – The purpose of this paper is to discuss credit card fraud in Trinidad and Tobago.
Design/methodology/approach – The paper describes credit card typologies in Trinidad and
Tobago and the existing law governing such fraud. It outlines the success and inadequacies of the
enforcement machinery and issues involving credit card fraud detection and prevention.
Findings – The law regarding credit cards is in a very confused and unsatisfactory state in Trinidad
and Tobago. Education in counteracting the criminal activities of credit card fraudsters is vital.
Informing the public of the various fraudulent typologies relative to credit cards and at the same time,
advising members how to protect themselves are the most effective methods to address the fraud
problem. The Bankers Association of Trinidad and Tobago should also play a critical role in
addressing credit card fraud. The association should formulate credit card policies along similar
principles as those formulated for cheque fraud to benefit all banks and merchants.
Originality/value – Credit card fraud has only been a recent phenomenon in Trinidad and Tobago.
This paper is valuable in offering suggestions as to the way forward in the prevention of such fraud.
Keywords Fraud, Credit cards,Trinidad and Tobago
Paper type Viewpoint
1. Introduction
Credit card fraud continues to escalate in Trinidad and Tobago and if this situation is
not meaningfully addressed, it can negatively impact on the overall profitability of the
issuers[1].
Credit card fraud is growing in popularity in Trinidad and Tobago because it is
easy, often anonymous and leaves no trace. Victims usually are ordinary citizens and
they seldom report the crimes to the police, since their main concern is to be
compensated for the loss, rather than to have the police prosecute the offenders.
Credit card fraud is successful because the chances of being caught are small and in
Trinidad and Tobago at present the law is in its embryonic stage with few cases
having been brought before our local courts[2]. No one to date has been successfully
prosecuted in Trinidad and Tobago for any credit card fraud related offences.
2. Credit card fraud typologies in Trinidad and Tobago
The issuance of credit card in Trinidad and Tobago is only a recent phenomenon,
having started in the early 1990s by the two major local financial institutions,
Royal Bank of Trinidad and Tobago Limited (now RBTT Bank Limited) and Republic
Bank Limited.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1359-0790.htm
This paper is based on a dissertation submitted by the author for the LLM in Corporate and
Commercial Law, University of the West Indies.
JFC
14,3
340
Journal of Financial Crime
Vol. 14 No. 3, 2007
pp. 340-359
qEmerald Group Publishing Limited
1359-0790
DOI 10.1108/13590790710758521
The importance of the credit card in the operation of one’s business activities in
Trinidad and Tobago is further exemplified by the fact that legislation was recently
enacted to govern its operations. Under the Electronic Transfer of Funds Crime Act
2000 (ETFCA) of Trinidad and Tobago[3], a credit card is defined as:
...any instrument, token, device, or card, whether known as a charge card or by any other
similar name, issued with or without a fee by an issuer for the use of the cardholder in
obtaining goods, services, or anything else of value on credit from a creditor or for use in an
automated banking device to obtain money or any of the services offered through the
device[4].
Credit card fraud is increasing exponentially, both locally and internationally.
The greatest threat in recent years has been from organized groups and is international
in scope.
Perhaps, the situation is best described by the testimony of the United States Secret
Service before the US House of Representative Committee on Banking and Financial
Services:
The United States Secret Service has seen the emergence of several international organized
criminal groups systematically attacking the financial systems through financial institution
fraud, counterfeiting of US. Currency, credit card fraud, advance fee fraud, computer fraud,
and telecommunications fraud. All those violations are investigative programme areas within
the United States Secret Service, in which we have accumulated specific expertise and
ongoing pro-active initiatives[5].
Today it is easier, safer and more profitable to steal with a credit card than with
a gun. Losses to businesses and banks from credit card fraud, continue to
increase exponentially, and no amount of legislation would be able to eradicate it
entirely.
The major credit card fraudulent typologies in Trinidad and Tobago are noted
hereunder.
2.1 Unauthorized use of lost/stolen cards
When a cardholder loses his card or it has been stolen, the “lucky” finder inv ariably
uses the card to make unauthorized purchases. Fraudulent activity normally occurs
within hours of the loss or theft before most victims have called to report the loss.
The victims are not even aware that their cards are being fraudulently used until they
received their monthly statements.
It will probably come as a surprise that the greatest number of stolen bank
cards was taken from glove compartments of parked cars. In fact, based on a
sampling of some 12,000 incidents of fraud in which a MasterCard or Visa card
was reported as stolen, 18 per cent was stolen from the cardholder’s vehicle[6].
Vying for first place as a source of stolen credit cards is the workplace. The same
study revealed that 17 per cent of the 12,000 fraudulently used cards were stolen at the
cardholder’s place of employment, most often from jacket or purse left unattended at
the office, or from an unsecured locker.
Another 10 per cent of this sample were cards stolen from lockers at recreational
facilities such as squash clubs, golf courses, swimming pools and health clubs.
Credit card fraud
in Trinidad and
Tobago
341
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