Plastic cards under surveillance

It is highly unlikely that every time you use a credit or debit card to take out cash, make a purchase or transfer funds you realize that a multifaceted fraud detection system comes into play that same instant. With every bank's system being different all of the security features target just one goal  - to determine if a particular transaction is legitimate or not.

"People aren't really aware of the fact that transactions that they make with financial institutions are being monitored," said Paul Stephens, director of policy and advocacy form the Privacy Rights Clearinghouse, USA. "Hundreds of thousands of innocent people are having their everyday banking transactions forwarded to the federal government."

Whenever a customer is issued a plastic card, the bank's computerized fraud detection system starts building a profile. A sophisticated network of computers record shopping patterns, particular locations and purchase sequence. "The banks are given a great amount of leeway in making a determination as to what constitutes 'suspicious," Stephens said.

It is much harder for vendors or secondary financial institutions to implement a successful fraud detection system. Recent legal proceeding against some on-line payment systems as e-gold and Liberty dollar show that fraudulent cards can be used without the vendor's knowledge however the vendor is fully responsible for the transaction to be legitimate.