by Alison Storm | 06/11/10

The World Cup kicks off June 11 and experts say so will an increase in credit card fraud. As hundreds of thousands of soccer (or football) fans descend on South Africa, so will crooks with plans of stealing credit card numbers. When banks start to notice unusual activity on cardholders' accounts, often they'll flag the card as being stolen. That can put a stop to any purchases being made, regardless of whether they're being done by the actual cardholder or a scammer.

A new software product was developed with this problem in mind. How do you determine whether activity is suspicious, or just the user on vacation?  Current technology uses a cardholder's history. So if they typically make purchases in Houston and are suddenly shopping in Cape Town, then the account would be flagged. "But this approach has two big limitations. It may take several of these doubtful purchases to trigger the fraud alert. By then, criminals may have gotten away with thousands of dollars of goods." says Pat Carroll, CEO of ValidSoft in a company news release. The company says nine out of every ten cross-border transactions flagged as being fraudulent are actually not. These are called false positives and can cost the bank $10 a pop since the bank has to take the time to determine whether the card use is valid or not.

One solution is to let your bank know when you're going to be traveling out of the country. Another solution is new technology by ValidSoft. The software uses cell phone data to determine whether transactions are fraudulent or not. Credit card use is linked to the cardholder's mobile phone. If the cell phone is in the same place as the credit card, the bank knows purchases are legitimate. The company says the verification process only takes a half a second and is able to determine real transactions correctly 95 percent of the time. This increases fraud detection. "It turns the 90% failure rate on its head," says Carrol in a release. The software would save banks money and cardholders headaches.