Balance transfer credit card customers at risk from fraudsters

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www.creditcards.co.uk Friday, 12 Feb 2010, 9:55am

Researchers at Cambridge University have discovered that the chip and pin banking system is fundamentally flawed.

Balance transfer credit card holders have been warned that fraudsters have found a way to exploit major flaws in the chip and pin system using stolen cards.

Researchers at Cambridge University have claimed that the fraudsters are placing a “wedge” into the terminal to convince it into believing that the correct security numbers have been entered into the system.

In effect, this process enables crooks to withdraw money without actually knowing the pin number for an account.

The revelation raises major concerns about the chip and pin system because it renders balance transfer credit card holders vulnerable to fraud.

Professor Ross Anderson described the current credit card system as “fundamentally broken”.

He said: “We think this is one of the biggest flaws that we’ve uncovered – that has ever been uncovered – against payment systems and I’ve been in this business for 25 years.

“Customers are often told that their pin was used and so it’s their fault. Yet we’ve shown that it’s easy to use a card without knowing the pin.”

Meanwhile, moneysavingexpert.com recently revealed that the number of interest-free balance transfer credit card deals has increased as more banks offer to clear debt at cheap rates.

The website has listed seven cards with a 15-month or more zero per cent period, while there was only one such card available this time in 2009.

Indeed, Virgin Money’s 16-month zero per cent rate with a 2.98 per cent fee was the only deal of its kind in place last year.

Posted by Tobias Bluth

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