Credit Card Fraud: The Neglected Crime

Credit cards are an integral part of the American economy. 1 Due to the widespread use of credit cards and checks, we have become a "cashless society." 2 Credit card usage has grown rapidly, 3 therefore, "[t]he plastic credit card seems destined to replace the paper check as the primary means of paying for goods and services.' 4 The extensive use of credit cards, however, has its drawbacks.Credit card fraud is foremost among these problems.5 The to-1 For an early observation of the role of credit cards in the American economy, see Note, The Apportionment of Credit Card Fraud Loss, 4 U.C.D. L. REV.377, 377 (1971). 2 In 1972, an Illinois Commission on credit card fraud observed that we were "quickly becoming a cashless society."ILL.LEG.INVESTIGATING COMM'N, CREDIT CARD FRAUD IN ILLINOIS (1972).Two years later, Justice White declared that the country had entered the "era of the 'cashless' society."United States v. Maze, 414 U.S. 395, 416 (1974) (White, J., dissenting).See also Landey, Consumer Cardholder Defenses in Tripartite Credit Card Arrangements: A Battleground for the Beleagured Bank, 88 COM.L.J. 84, 84 (1983).3 J.FONSECA & P. TEACHOUT, HANDLING CONSUMER CREDIT CASES § 10.7 (2d ed.1980) (reporting geometric increase in credit card usage).In 1984, consumer credit purchases totalled 296 billion dollars, which is approximately a six hundred percent increase over the amount of credit card purchases in 1970.See NEwSwEEK, July 8, 1985, at 52; Note, supra note 1, at 377. 4 J. FONSECA & P. TEACHOUT, supra note 3, at § 10.1; see also The Credit Card Protection Act: Hearings Before the Subcomm.on Consumer Affairs and Coinage of the House Comm.on Banking, Finance, and Urban Affairs on H.R. 2885 and H.R. 3622, 98th Cong., 1st Sess.287 (1983) [hereinafter cited as House Hearings] (statement of the National Retail Merchants Association).In the United States, 116 million people own 720 million active credit cards.See FORBES, Nov. 5, 1984, at 229; L.A. Times, March 18, 1984, § 5, at 3. 5 See U.S. NEWS & WORLD REP., Oct. 3, 1983, at 78; see also NATION'S Bus., May 1984, at 20 (credit card fraud is fastest growing crime against business).The amount of fraud perpetrated against the two major bank cards (VISA and Mastercard) in 1982 was 125.8 million dollars, which was two and a half times greater than the amount of money stolen in bank robberies.See Credit Card Fraud, Hearing before the Subcomm.