Credit card fraud tops financial crimes

Credit card fraud accounted for 88 percent of the financial crime cases heard in the city's courts last year, Shanghai's high court said Thursday.

Shanghai courts heard 2,030 cases of financial crime in 2012, up nearly 76 percent from the previous year, according to statistics from Shanghai Higher People's Court. Of those cases, the courts handled 1,694 credit card fraud cases, 77.3 percent more than in 2011.

The vast majority of the credit card fraud cases involved what the court called "malicious overdraft," a crime in which a cardholder makes charges that he or she lacks the means to repay.

"The rising number of malicious overdraft cases is partly related to poor management at the banks," said Bo Haibao, the dean of the law school at Shanghai Finance University. "When they issue the cards, they do not thoroughly examine a cardholder's ability to repay the charges."

Examining a credit card applicant's personal finances has become little more than a formality at many banks, whose primary goal is to attract clients, Bo said. This has gradually led to an increase in credit card fraud.

The Shanghai Higher People's Court pointed out that the banking system doesn't have a mechanism to share information about applicants with bad credit, which allows cardholders to borrow cash from one credit card to pay back another.

Credit card theft and obtaining a card with false information are the other major forms of fraud that the city's courts have dealt with, according to a press release from the high court.

"It's very easy to steal credit card information at point-of-sale (POS) machines if the cardholder isn't paying attention," Bo told the Global Times.

Some card readers allow criminals to steal card information and passwords right off the cards, Bo said. With this information, they can use the card to withdraw cash.

The high court said it is up to the banks, POS machine manufacturers and government agencies such as the Shanghai Administration for Industry and Commerce, to upgrade the technology of POS machines.

"Rather than just handing out cards, the banks need to improve their services to better protect their clients without charging additional fees," Bo said. "It is often the case in China that banks charge extra fees for something they should already be doing."

Apart from criminal cases, the city's courts heard 23,113 civil cases involving financial and commercial disputes in 2012, up 263 percent from the previous year, according to the press release.