Electronic Pick pocketing - A skeptical analysis.

There's a story going around about how people can now steal from you by reading your "RFID enabled" credit card by just walking past you. WREG News 3 report

Everything in the article and clip is technically true and possible, however they do present it in a very biased and hyped way.

In fact, what this clip resembles most to me is a great advertisement for the guy and his company, who just happen sell the special "wallet" which will protect you from this latest "great danger".

This happens pretty much every time a new technology comes around: Luddites protested the industrial revolution as it would leave everyone out of work and ruin the world. Of course in the age of capitalism, people work out how to make money off even this: Label it as the latest "great danger" that will ruin the world and then sell something to protect you from it. it happened to the internet, mobile phones and now RFID credit cards. They call it "technology run wild". What they "forget" to mention is that banks are not that stupid, of course they know this kind of stuff is going to happen and they have some very sophisticated security measures against it.

The only reasonable way someone is really going to get away with this is, funnily enough, exactly how the guy describes: someone has to buy something "not so expensive" on the internet and have it sent to an empty house and collect it after it is delivered. But you can really only do this once; that's quite a lot of effort and risk to steal something cheap from the internet, so who is really going to bother? No one can take a lump sum of "cash" out of your credit card because the accounts would be traced, and if someone tries to buy anything really expensive it is also suspicions and the bank will probably notice. I've been called by my bank before when I've bought stuff overseas, to check that the transaction is legitimate. Someone could try to steal a LOT of card numbers and make a lot of small transactions, but they couldn't have it all delivered to one place since that's also suspicious and they could eventually get caught collecting it.

The most important thing that the report does not mention is that if you do get your credit card number stolen, you are not even liable. It doesn't matter what bank you are with, every bank I know of has this policy since at least the beginning of internet banking. If your credit card is used in an unauthorized transaction, the bank will pay you back, full stop. Whether your wallet is lost or stolen, whether someone steals your credit card number from the internet, from another legitimate transaction, or if someone steals it using a RFID card reader.

Obviously the banks don't want to be paying money just for fraud, they take this very seriously, even with the added "risk" (real or perceived), the banks still think it is worth it for adapting this new technology. Why? Because it makes life so much easier! Imagine a world where you don't have to insert cards, sign pieces of paper, wait for print outs, do people really LOVE doing all that stuff? Do they think that system is more "fraud proof"? Remember before the internet when we had to imprint credit cards with those clunking machines? The 1st thing invented after credit cards was credit card fraud. Do people give up their credit cards because they aren't worth the risk? The only reason I've even known for people to give up credit cards is because they don't trust them selves with the money. That's a real reason.

Trust me, if these wallets were really going to protect your (or the bank's) money in a proper "risk analysis", these banks would be the 1st to make you have one, it would already be incorporated into the card. But who knows: maybe one day such a thing will be incorporated into the cards, if the banks decide it is worth it. That wouldn't prove me "wrong," all that would prove is that the banks are always looking to reduce their risk and costs. For the time being, I'm not going to rush out to buy any "special wallet".

I think part of the problem is that our lives are getting so "convenient" that some people become completely oblivious to the fact that you still need a certain level of vigilance and responsibility over your actions and finances. They think the world owes them a service which gives them instant access to an unlimited amount of money anywhere, at any time and in any place, with no cost or risk or delay. Often a transaction online can SEEM like all those things, but what we don't get to appreciate is the "hidden" costs and risks, so when they do appear, some people feel indignant as if this was not part of "the deal". But of course, it's life, everything has a risk and a cost and I do mean everything.

I don't want to "down play" credit card fraud; it is very real, it does happen and it's probably not as uncommon as a lot of people think, but there are systems in place to help protect us and as long as you take a basic level of precautions and responsibility, you should not be out of pocket even if you are unlucky enough to be the target of fraud. The most important thing do to is regularly check your statements for unusual transactions and report anything as soon as you can, especially a lost or stolen card, as long as you do that the bank should cover you if any unauthorized transactions get through on your card. But this is something everyone should be doing already anyway. I don't believe the introduction of RFID significantly increases the risk of using your credit card.