After a relaxing trip to Southern California, I returned last week on any bosses least favorite day – April Fools.  Typically I make it a point to not be in the office on April Fools.  I feel like its just better for everyone that I’m not there.  Unfortunately this year that was not an option.   I was backlogged with work and was in no mood for any pranking.

My assistant walked into my office and asked me if I had been in San Francisco at all.  I said “No, why?”.  He then proceeded to tell me that someone used my Amex at a handful of Chevron’s in the San Francisco area, racking up roughly $600 in erroneous charges.  I thought to myself – “Does he really think he is going to pull a fast one on me?”.  I laughed and said “Yeah.. April Fools.. Funny – now leave me alone.”.. He still had a straight face.  I proceeded to login to my Amex account to find that there were in fact a number of charges at Chevron stations all over San Francisco.

I thought to myself.. this is either a very elaborate and well executed April Fools, or he is not kidding.  I sided with the latter.  Thankfully American Express has an excellent fraud prevention program.  They removed the charges, cancelled my card and sent a new card out for next day delivery.

I started to think to myself – why have we not adopted the PIN system for credit cards?  Almost every foreign country I’ve ever visited has a PIN system attached to their credit card.  It is an additional layer of security and acts in the same fashion as a debit card.  Half the time when I try to use my card internationally they stare at me blindly when I tell them I don’t have a PIN to enter.

So my credit card arrives the next day. I open up the package and am surprised that my new card has a micro chip showing through the front.  The micro chip is an RFID for the new ‘swipe to pay’ that the credit card companies are trying to implement.  Thats exactly what we need – rather than trying to find ways to decrease fraud, lets make it so that merchants are not even seeing the credit card.  At least when you shop online you have to have pertinent information related to the billing address and the CVV on the card.

I recently read an article on Forbes that surveyed consumers in 17 countries over a five year period.  The US is ranked second in credit card fraud, with 42% of respondents being exposed to credit card fraud of some sort in the past five years.  You will notice the european countries are at the bottom, with substantially less respondents being exposed to fraud.

What many consumers may not realize is that the cost of fraud is passed onto merchants who sell goods.  These charges are then built into the cost of the product.  So, essentially consumers are paying for the credit card companies insufficient fraud protection practices.

For those of you wondering whether the infamous American Express card is actually made out of titanium – here is the result of Amex vs paper shredder.

-Mike