Overseas purchases made via the internet have been identified as the main culprits in a rise in credit card fraud and consumers are being warned to take more care.

According to new Australian Payments Clearing Association data for 2007, credit and charge card fraud rose to 44.5 cents for every $1000 of transactions, from 36.9 cents the previous year.

The Australian Bankers' Association says about 70 per cent of that increase is related to Australian cardholders making purchases overseas via the internet and telephone - known as "card not present" transactions.

That association's chief executive, David Bell, says: "Banks tell us customers are increasingly shopping online overseas and unfortunately some of these outlets may not have strong protections in place."

The clearing association's chief executive, Chris Hamilton, says: "[The statistics show] that even as today's technology makes it possible to buy anything from anywhere, it's also making it possible for fraudsters to operate globally. Australian consumers and retailers need to take particular care when not dealing face-to-face."

That said, payments fraud was slightly lower overall when cheques and debit cards are included, dropping to 6.2 cents for every $1000 from 6.3 cents a year earlier.

The overall result was helped by a more than halving of cheque fraud, from a rate of 1.9 cents to 0.8 cents, while debit cards (used for Eftpos transactions and in ATMs) showed a fall from 7.7 cents to 7.1 cents in every $1000.

The payments association says Australia's overall rate of fraud remains low by global standards. The rate of fraud on payment cards (debit, credit and charge cards) is four times higher in Britain, Hamilton says.

Even the increase in card-not-present and cross-border fraud is consistent with trends in Britain and the Asia-Pacific region in recent years, he says.

What should consumers do if they discover a suspect transaction on their credit card or find themselves in dispute with an overseas merchant? Bell says they should notify their bank or credit card provider immediately. You can dispute a transaction, for instance, when mail-order goods fail to arrive or are broken or faulty. You can also act if you're charged twice or for more than you authorised, or if your card details are stolen and used illegally to buy goods over the internet.

"Usually, in these circumstances, your credit card provider will reverse the transaction immediately. The provider then seeks a 'chargeback' from the merchant's bank," Bell says. "Unless the merchant can establish that you, or a secondary cardholder, did in fact receive the goods or authorise the transaction, the reversal will remain in place."

Time limits apply, he says, and that's why people should always check their credit card statements promptly and carefully.

You can be tripped up, though, when a legitimate purchase appears under a different and unfamiliar name on your statement.

If contemplating seeking a reversal, Bell says you should first check that the transaction can't be matched to one of your credit receipts [which makes it a good idea to keep them].

Bell says consumers aren't held financially liable in genuine cases of fraud.

New "chip" credit cards are being promoted as being more secure but Bell says they're not a "silver bullet". Chip and PIN cards look the same as the magnetic-strip cards we're used to but the new ones have a computer chip embedded in them.

Instead of signing for each purchase, the cardholder can enter a four-digit number into a keypad at the cash register, as they would with a debit card at an ATM.

The payments and bankers' association have held a workshop on tackling fraud and Bell says internet and card-not-present fraud was discussed, along with the creation of guidelines for authenticating identity.

Precautions to take

The Australian Bankers' Association advises taking these precautions when shopping online:

 - Read the website's privacy and security policies. Look for details such as the returns policy, product warranties, the exchange rate used and how complaints are handled.

- Provide only necessary information. Sometimes businesses ask for personal information they don't really need.

- Never send your credit card number by email. Emails are not secure.

- Save all transaction details. Print the seller's identification, the item description, the price you paid or bid, plus the time and date. Print and save copies of your order confirmation screen.

- Keep your password private. Most e-commerce websites require shoppers to log in. Never reveal that password.

- Check the website address yourself and manually type in the URL. There have been cases of consumers being tricked into providing their credit card details to supposedly buy goods or services from websites that are, in fact, impostors.

More information can be found at the Protect Your Financial Identity website set up by the ABA, the Australian Securities and Investments Commission and the Australian High Tech Crime Centre, at www.protectfinancialid.org.au.