The security of payWave credit cards is under the spotlight after a woman allegedly racked up nearly $800 worth of goods with a stolen, pre-activated card.
TSB bank has confirmed it is reviewing its policy around sending out payWave credit cards, which can be waved at registers for purchases under $80 without requiring either a PIN or a signature.
A pre-activated TSB payWave card sent to a Christchurch customer last week went missing from a letterbox and was used on a shopping spree.
Hopping between five separate 24-hour service stations, the alleged fraudster racked up nearly $800 of charges in 70 minutes.
At the final service station, five payWave transactions for $50 gift cards were made. The fifth transaction failed when anti-fraud protection kicked in.
A final, unsuccessful transaction was attempted at an ATM. A woman was identified from CCTV footage and has been charged with the fraudulent use of the credit card, police said.
The customer, who did not wish to be named, said he was "absolutely stunned they could get away with it".
He questioned why TSB mailed pre-activated cards, allowing them to be used with the payWave function without any PIN or signature verification.
More than 1.5 million payWave cards have been issued in New Zealand since they were launched in 2011, and Visa says they are fast becoming the preferred method of electronic payment for Kiwis.
TSB Bank lending services manager Phil Gerrard said cards were sent out pre-activated as a convenience factor for the customer.
The customer had been reimbursed for the fraudulent activity, and the bank would "undertake a review" as a result of the incident, he said.
A Visa spokeswoman said policies around card activation differed from bank to bank. Even if pre-activated cards caused security issues, "Visa can't really mandate bank policy".
She advised card holders to check with their banks if they had concerns.
ANZ, ASB and BNZ also offer payWave cards. ASB and BNZ send out unactivated cards which require the customer to make a further step after receiving the card in the mail.
An ANZ spokesman said any customers with concerns could opt to pick up a card from the bank.
Consumer NZ finance writer Kate Sluka said she was surprised TSB was sending out pre-activated cards. Theft from letterboxes was no different from the "old-style credit cards" where someone could have gone on an online spending spree, she said.
It was a risky move on TSB's part and unnecessary since other banks send cards unactivated, she added.
Visa's New Zealand country manager Caroline Ada said the new cards were just as secure as chip cards, with the added benefit they did not leave the customer's hand during a transaction.
- Sunday Star Times
Have you adjusted to the new alcohol limits for drivers?Related story: New alcohol limits catch first drivers