Credit card fraud tops Shanghai’s financial crimes list

Accounted for 88% of financial crime cases in court in 2012.

The Shanghai Higher People's Court said it heard 2,030 cases of financial crime in 2012, up 76% from 2011. Of those cases, it handled 1,694 credit card fraud cases, 77.3% more than in 2011.

The court noted 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 in Shanghai.

The vast majority of credit card fraud cases involve what the court describes as "malicious overdraft," a crime in which a cardholder alleges that he lacks the means to repay.

Analysts said the rising number of malicious overdraft cases is partly because banks do not thoroughly examine a cardholder's ability to repay the charges.

Currently, examining a credit card applicant's personal finances is little more than a formality at many banks, whose primary goal is to add clients. This has gradually led to an increase in credit card fraud.

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