RESOURCE MATERIAL SERIES No. 55

COMBATING CREDIT CARD CRIME:
ENACTING EFFECTIVE CRIMINAL LAWS
Donald K. Piragoff*
I. INTRODUTION
Modern technology has advanced to thepoint where, around the world, a large
percentage of financial transactions involvethe use of credit cards and devices for
obtaining goods and services. Complicating
the issue is the proliferation of other typesof information-carrying cards, such as debit
cards, and pre-paymemt cards designed forspecific purposes, and electronic cash cards.
The economy of any country that relies on
the use of such cards must have an effective
legal structure for deterring abuse.
Credit cards and other such cards
function by transferring data or
information; the cards themselves are oflittle value. It is the data or information
stored on the card that is of use to trigger
or make a commercial or financialtransaction. The card is merely a physicalmechanism by which this information canbe stored and easily transported and usedby the person wishing to make thecommercial or financial transaction.
However, the possibility of abuse is great.
The relevant information can beintercepted and manipulated at various
stages, from manufacture of the card, todelivery of the card to the card-holder, topossession and loss of the card by the cardholder, to the use of the card at a retailer.
Abuse can occur in various ways, fromunauthorized use of a card, to falsifying acard, and to unauthorized use of theinformation even without possession or useof the card. Moreover, the card andinformation may be subject to abuse by just
* General Counsel of the Criminal Law Policy
Section, Department of Justice, Canada

54

about anyone, from the card-holder to themerchant, from persons in temporary
possession to sophisticated criminalorganizations to a person who catches a
glimpse of someone else’s card andremembers the key information embossedon it.
Ultimately, modern technology brings
more than just convenience, it also creates
tremendous opportunity for clever
criminals unlawfully to use or appropriate
credit cards or the stored information.
Industry losses from credit card crime
reach millions of dollars every year, andthe figure keeps increasing. In Canada
alone, it was estimated that there were
89,000 occurrences of credit card fraud in1997.1 Equally important, the number offraudulent uses of credit cards has
increased dramatically over the past
several years. As techniques forcounterfeiting cards and misappropriating
information become more sophisticatedand less expensive, the problem of payment
card fraud will continue to escalate.
Credit card companies and otherfinancial institutions have implemented
numerous technical and operational
mechanisms for preventing and detecting
credit card crime. Individuals who arelegally in possession of cards may also takeprecautionary behavioural steps to reduce
the likelihood of someone else obtaining thecard or information for unlawful purposes.
The problem can be attacked from manysides, and with the efforts and ingenuityof everyone involved with the cards.
1

Courtesy of Canadian Bankers Association.

110TH INTERNATIONAL TRAINING COURSE
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In addition to the various technical andbehavioural countermeasures against
credit card crime, there is a role for thecriminal justice system in deterring credit
card crime, and in providing an effective
system for prosecuting offences when they
do occur. This paper will address the latterissue: the role of substantive criminal law
in addressing credit card crime. Reference
will be made to various legal structures inNorth America, particularly within
Canada, to illustrate and determine some
optimum legal proscriptions andprocedures for countering credit card crime.

technology has advanced and evolved
rapidly, and continues to do so at a fantastic
rate. The criminal law must keep up withthat pace of change in order to be effective.
Therefore, it is important that definitions
not be too technologically or commercially
specific.
For example, the state of New Yorkdescribes “credit card” in the following
way2:“Credit card” means and includes any credit card,credit plate, charge plate, courtesy card, or otheridentification card or device issued by a person toanother person which may be used to obtain a cash
advance or a loan or credit or to purchase or leaseproperty or services on the credit of the issuer or of
the holder;

II. ESSENTIAL ELEMENTS OF A
CRIMINAL LAW
Any criminal law that is intended toeffectively prevent crime involving credit
cards must have certain basic elements.
The criminal law functions by describing
as offences those acts that are to beprohibited, establishing a procedure forprosecuting individuals accused of thoseacts, and providing for penalties where thecommission of those acts has been proved.
Different jurisdictions may choose topenalize particular crimes in any numberof different ways. However, in the case ofa global and universal problems such as
credit card crime, there may be certain
common features to an effective set of
criminal offences and procedures that arenecessary for a coordinated international
approach.
A. Defining ‘‘Credit Card”
One fundamental feature of an effective
criminal law against credit card crime is adefinition of what is included within theterm “credit card”. Absent a clear
definition, a criminal law would be
potentially too broad in which case it mightcatch behaviour that should not becriminalized, or too vague and ambiguous
and therefore difficult to apply or interpret.
It is also important to note that modern

New York penal law also applies to “debit
cards”3:“Debit Card” means a card, plate or other similar
device issued by a person to another person which
may be used, without a personal identification
number, code or similar identification number, codeor similar identifcation, to purchase or leaseproperty or services. The term does not include acredit card or a check, draft or similar instrument.

While the New York definitions areadequate in describing cards used to obtain
credit or to debit directly an account for the
purpose of purchasing property or services,
it is not clear that bank cards used solely
to access one’s bank account to withdraw,
deposit or transfer money are included inthese definitons. Interestingly, certain
offences in New York also apply to a “publicbenefit card”, defined as any “medical
assistance card, food stamp assistancecard, or any other identification,authorization card or electronic accessdevice issued by the state or a social
2
3

CLS Penal Law § 155.
CLS Penal Law§ 155 as am. L1987, ch556, § 7.

55

RESOURCE MATERIAL SERIES No. 55
services district... which entitles a person
to obtain public assistance benefits undera local, state or federal program...”.4
In Canada, the Criminal Code5 defines
the term “credit card” in s. 3216 as:“any card, plate, coupon book or other device issued
or otherwise distributed for the purpose of being
used:(a) on presentation to obtain, on credit, money,
goods, services or any other thing of value; or(b) in an automated teller machine, a remote service
unit or a similar automated banking device toobtain any of the services offered through themachine, unit or device”.

A definition such as this one takes into
account the multiple functions served by
payment and access cards. Paragraph321(a) is commercially specific to a credit
transaction. Paragraph 321(b), however,contains a broader definition, recognizingthat modern technology has reached astage where the ways in which a card isused are greater than just the presentationof the card to a merchant for the purchaseof goods and services on credit. The
definition catches not only debit cards (i.e.
cards permitting direct debit of a bankaccount), but also what are commonlyreferred to as bank or access cards, a card
inserted into automated machines for the
purpose of obtaining any services offeredby the machine associated with a financial
institution. However, it should also be
noted that paragraph 321(b) is still
somewhat limited in that it applies only tocards used in automated machines
somehow connected to the banking
industry. So for example, long distance
telephone calling cards or telephone prepayment cards would not appear to be
included.7
4

CLS Penal Law§ 155 as am L1995, ch81, § 169.
R.S.C. 1985, c. C-46.
6 R.S.C. 1985 c. 27 (1st Supp.), s.42.
556

The United States Federal Codecontains an even broader definition. The
Code focuses on “access devices”, defined
as “any card, plate, code, account number,or other means of account access that canbe used, alone or in conjunction withanother access device, to obtain money,
goods, services, or any other thing of value,or that can be used to initiate a transfer offunds (other than a transfer originatedsolely by paper instrument)”. 8 Thisdefinition is very useful. It is sufficiently
broad and open-ended to cover any
technological advances in account access.
It is also broad in terms of the types oftransactions to which it applies. For
instance, it applies not only to devices used
for purchase of goods and services, but also
to transfer of fund transactions, as well astransactions for “any other thing of value”.
Unlike the Canadian definition, it is not
limited to automated machines associatedwith financial institutions. As well, it
includes “account number” as an accessdevice, so that the offences apply to the useof the pertinent information alone, even in
the absence of a card or other physicaldevice.
B. Proscribing Offences
In addition to the difficult task ofdefining the term “credit card”, it isessential that the criminal law carefully
and adequately define all of the conductthat is to be prohibited. Because of thecomplexity and number of ways that credit
cards are used, there is perhaps an evengreater number of ways that credit cards
can be used fraudulently or unlawfully.
Each of these should be explicitly covered
in a criminal law to ensure that allloopholes are closed to potential crime. It
7

It should be noted, however, that fake telephonecards or other devices to improperly obtaintelecommunication services are addressed bysections 326 and 327 of the Criminal Code.
8 18 U.S.C. § 1029(e)(1).

110TH INTERNATIONAL TRAINING COURSE
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should be noted that if numerous offences
are set out, there may be overlap between
the elements from one offence to another.
Moreover, factual circumstances may
reveal that more than one offence has beencommitted. Some of the types of criminal
conduct associated with credit card (oraccess card) crime include: theft of the card;
forgery or falsification, possession, use ortrafficking of stolen, forged or falsified
cards; possession, use or traffic in credit
card data; possession of instruments forforging or falsifying credit cards.
Different jurisdictions may employ
different techniques to proscribe conduct.
Some may simply apply offences of generalapplication, such as theft and forgery, tooffences involving credit cards. Others may
have specific offences concerning credit
cards. Finally, some jurisdictions may use
a combination of approaches. In Canada,
a combined approach is used. The mannerof prosecution and range of penalty for thegeneral offence of theft is largely dependent
on the value of the property that has beenstolen. 9This approach is not appropriate withrespect to theft of credit cards, since thecards themselves, the stolen property, havelittle or no value, but the economic loss
associated with their misuse can be great.
As the existing structure was not easily
9

Pursuant to s. 334 of the Criminal Code, where thevalue of the property stolen exceeds $5000, theoffence is indictable and carries a maximum penalty
of 10 years imprisonment. Where the value of theproperty stolen is equal to or less than $5000, theoffence is either indictable, with a maximum of 2
years, or summary, with a maximum of 6 months.
An additional consequence is that theft under $5000
is within the absolute jurisdiction of a provincial
court judge according to s. 553 of the Criminal Code,while theft over $5000 can be tried before a judge,
a judge and jury, or a provincial court judge, at theoption of the accused.

adapted to credit cards and other payment
cards, a new and separate provision wasenacted to deal specifically with credit
cards.10 Within the specific provision on
credit cards, reference is made to otherexisting offences, thereby importing thedefinition of these offences as part of thetypes of prohibited conduct in relation tocredit cards. As well, the new provisioncontains new and specialized offences
which relate exclusively to credit cards.
Section 342 of the Criminal Code reads:
342. (1) Every person who(a) steals a credit card,(b) forges or falsifies a credit card,(c) possesses, uses or traffics in a credit cardor a forged or falsified credit card,knowing that it was obtained, made oraltered(i) by the commission in Canada of an
offence, or(ii) by an act or omission anywhere that,
if it had occurred in Canada, would
have constituted an offence, or(d) uses a credit card knowing that it has
been revoked or cancelled, is guilty of(e) an indictable offence and is liable toimprisonment for a term not exceedingten years, or(f) an offence punishable on summaryconviction

1. Theft of Property
As the nature of property rights can bequite complex and because there are a
multitude of types of property and uses ofproperty, there may be many ways in which
property can effectively be misappropriatedby another without consent. It is, therefore,
important that ‘‘credit cards’’ be considered
as property, both in terms of the physical10 R.S.C. 1985 c.C-46 as am. S.C. 1997, c.18, s.16(1).

The manner of prosecution and the penalty are notdependent on the value of the card. This is one
range or penalty, and the manner of prosecution is
subject to prosecutorial discretion.

57

RESOURCE MATERIAL SERIES No. 55
card and as evidencing rights to property
that the card may represent.
In Canada, “property” is defined in
section 2 of the Criminal Code as:(a) real and personal property of every description
and deeds and instruments relating to or
evidencing the title or right to property, or giving
a right to recover or receive money or goods,(b) property originally in the possession or under thecontrol of any person, and any property into or forwhich it has been converted or exchanged andanything acquired at any time by the conversion
or exchange, and(c) any postal card, postage stamp or other stamp
issued or prepared for issue under the authorityof Parliament or the legislature of a province forthe payment to the Crown or a corporate body of
any fee, rate or duty, whether or not it is in thepossession of the Crown or of any person...

In Canada, s.322 of Criminal Codedefines the offence of theft:
322. (1) Every one commits theft who fraudulently
and without colour of right takes, or
fraudulently and without colour of rightconverts to his use or to the use of anotherperson, anything, whether animate or
inanimate, with intent(a) to deprive, temporarily or absolutely, theowner of it, or a person who has a special
property or interest in it, of the thing orof his property or interest in it;(b) to pledge it or deposit it as security;(c) to part with it under a condition withrespect to its return that the person who
parts with it may be unable to perform;or(d) to deal with it in such a manner that it
cannot be restored in the condition inwhich it was at the time it was taken or
converted.
(2) A person commits theft when, with intent
to steal anything, he moves it or causes it
to move or to be moved, or begins to cause
it to become movable.

58(3) A taking or conversion of anything may be
fradulent notwithstanding that it is effectedwithout secrecy or attempt at concealment.
(4) For the purposes of this Act, the question
whether anything that is converted is taken
for the purpose of conversion, or whether it
is, at the time it is converted, in the lawful
possession of the person who converts it is
not material

In this statute, the act of theft iscommitted by either a “taking” or a“conversion” of the property to the accused’s
own use. Even in the absence of a taking,a person commits theft if they lawfully
come into possession of the card anddishonestly intends to keep it, eventemporarily, and use it for their own
purposes. This is what is meant by“conversion”. The notion of conversion isimportant to address the situation of a card
being borrowed and used without or beyond
the consent of the cardholder. The taking
or conversion must be done fraudulently
and without colour of right. The term
“fraudulently” has been interpreted tomean “dishonestly”and proof of fraud is notnecessary. The term “without colour ofright” means without an honest belief inthe legal right to act as the person does.
The accused must also have had the intent
to deprive the owner or lawful holder of thecard either permanently or temporarily.
This catches, for example, the taking of acard from someone’s possession. or theconversion of the card, with the intent tomake an unauthorized purchase and thenreturn the card.
An important consideration with respect
to the offence of theft is that it protects
property rights vis-à-vis a lawful possessor
and not merely the owner of the property.
With respect to credit cards, this element
is very important. Many agreements
governing the relationship between thecard issuer (e.g. credit card company) andthe client provide that the card always

110TH INTERNATIONAL TRAINING COURSE
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remains the property of the issuer. The
company remains owner and the cardholder is merely a lawful possessor.
Therefore, the phrase “the owner of it, or aperson who has a special property orinterest in it” is of significance as it allows
the card-holder (the person who has apossessory property interest) to be thecomplainant or “victim” in a case of theft.
In New York a person commits theoffence of larceny when “with intent todeprive another of property or toappropriate the same to himself or to athird person, he wrongfully takes, obtains
or withholds such property from an owner
thereof”.11 To “deprive” another of propertymeans to withhold it or cause it to be
withheld from him permanerntly or for so
extended a period or under suchcircumstances that the major portion of its
economic value or benefit is lost to him,
while “appropriate” means to exercise
control over property, or to aid a third
person to exercise control over it. The
notion of “appropriate” roughly parallels
the Canadian concept of “conversion”.
However, the New York statute limits theftto taking or appropriating property fromthe “owner”.
2. Theft of a Credit Card
Credit cards, being property, are capableof being stolen. Theft of credit cards canbe subsumed under the general offence oftheft, or it can be specifically prohibited in
an offence that targets credit card crime.
As noted above, in Canada, theft of a credit
card (and other criminal acts in relation tocredit cards) is a distinct offence, but theft
is defined within that provision byreference to the general offence of theft.12
3. Forgery or Falsification of a Credit
Card
Credit cards, like other documents that
11 CLP Penal Law §155.05.
12 See subsection 342(1)(c).

contain and are intended to convey
information, are vulnerable to being falsely
fabricated and made to look legitimate. For
example, blank cards can be imprinted
with account information obtained frommerchants or from discarded sales slips
and an encoded magnetic strips can be
added. The result is a card that looks
authentic and liable to be accepted bymerchants. Closely related to the act offalsely manufacturing a credit card is theact of altering or modifying an existing
legally manufactured card. Numbers or
letters can be smoothed out and reembossed to reflect a different account.
When a forged or falsified card is used
to obtain goods and services, the purchaseis made on credit and the user of the card
obviously incurs no cost. The cost will beborne by one of the other parties, either
the card-issuer, the card-holder or themerchant. Crime involving counterfeit
cards accounts for approximately 50% of
all losses related to credit card misuse in
Canada. 13 As well, as counterfeiting
techniques become cheaper and more
effective at circumventing security
features, the problem will continue to cost
millions of dollars in losses. An effective
criminal law must, therefore, prohibit
various acts related to manufacturing false
credit cards and altering legally
manufactured cards.
In Canada, s.342(1)(b) of the Criminal
Code prohibits the forgery or falsificationof a credit card. Forgery and falsification
are defined in s.366 of the Code as:366. (1) Every one commits forgery who makes afalse document, knowing it to be false, withintent(a) that it should in any way be used or
acted on as genuine, to the prejudice
13 Statistics for year 1997 in Canada, courtesy of

Canadian Bankers Association.

59

RESOURCE MATERIAL SERIES No. 55
of any one whether within Canada or
not; or(b) that a person should be induced, by the
belief that it is genuine, to do or torefrain from doing anything, whether
within Canada or not.
(2) Making a false document includes(a) altering a genuine document in any
material part;(b) making a material addition to agenuine document or adding to it afalse date, attestation, seal or otherthing that is material; or(c) making a material alteration in a
genuine document by erasure
obliteration, removal or in any otherway.
(3) Forgery is complete as soon as a document
is made with the knowledge and intent
referred to in subsection (1),notwithstanding that the person who
makes it does dot intend that any
particular person should use or act on it
as genuine or be induced, by the belief that
it is genuine, to do or refrain from doing
anything.
(4) Forgery is complete notwithstanding thatthe false document is incomplete or does
not purport to be a document that isbinding in law, if it is such as to indicatethat it was intended to be acted on as
genuine.

Section 321 of the Criminal Code
expressly includes “credit card” within thedefinition of “document”. The definitionsof “forgery” and “false document” in s.366
recognize that there are multiple ways inwhich a card or other document can bealtered. They also recognizes that harmstems from the intent to use the false cardor document to someone else’s detriment.
For this reason, it is important that the law
also address incomplete forgeries, if there
was intent to use the document upon its
completion. As is the case with respect totheft of a credit card, the offences offalsification and forgery can be dealt with60

in a specific provision dealing with credit
card crime, or in a general forgery andfalsification provision. In Canada, theoffence can be prosecuted under either the
specific or the general offence provision.
In the United States, a person commits
a federal offence who “knowingly and withintent to defraud produces, uses, or traffics
in one or more counterfeit access devices”.14“Produce” is defined as including design,
alter, authenticate, duplicate or assemble.15“Counterfeit access device” is defined as
any access device that is counterfeit,
fictitious, altered, or forged, or an
identifiable component of an access device
or a counterfeit access device”.16 In New
York, it is a crime to forge a credit card. A
persons commits forgery when, “with intent
to defraud, deceive or injure another, hefalsely makes, completes or alters a written
instrument which is or purports to be [acredit card], or which is calculated to
become or to represent [a credit card] if
completed”.17
4. Possession of Instruments for Forging
or Falsifying Credit Cards
If falsifying or forging a credit card iscriminalized because of the potential harmof counterfeit cards, it follows that various
other activities that assist or facilitate theforgery or falsification of credit cards
should also be prohibited. Schemes forforging and falsifying credit cards can bequite complex and sophisticated, andinvolve numerous levels of individuals.
Each link in the chain should be
criminalized to deter more effectively suchcriminal operations.
In Canada, the Criminal Code 18
14 18 U.S.C. § 1029(a)(1).
15 18 U.S.C. § 1029(e)(4).
16 18 U.S.C. § 1029(e)(2).
17 CLS Penal Code § 170.10.
18 R.S.C. 1985 c. C-46 as am. 1997, c.18, s.17.

110TH INTERNATIONAL TRAINING COURSE
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specifically prohibits activities related tothe possession of instruments for forging
and falsifying credit cards:
342.01 (1) Every person who, without lawful
justification or excuse,(a) makes or repairs,(b) buys or sells,(c) exports from or imports into Canada, or(d) possesses
any instrument, device, apparatus, material or
thing that the person knows has been used or knows
is adapted or intended for use in forging or falsifying
credit cards is guilty of an indictable offence andliable to imprisonment for a term not exceeding ten
years, or is guilty of an offence punishable onsummary conviction.

The offence is drafted broadly to apply
where there is knowledge of either past use
or intended future use of the instruments
for forgery. As well, it covers any
instrument, whatever its original purpose,that is intended to be used for forging or
falsifying credit cards. It is sufficiently
broad to include any “material thing” andtherefore would encompass materials suchas blank cards. This provision is alsosufficiently broad to prohibit many typesof conduct related to forgery equipment ormaterial, from possessing to selling or
buying to repairing and manufacturing.
Notably, it also prohibits the importationand exportation of such instruments ormaterials. This is important, especially in
the Canadian context, since at present
most instruments for forging cards are
manufactured outside Canada, andbrought into the country.
Under US federal law, anyone who“knowingly, and with intent to defraud,
produces, traffics in, has control of, or
possesses device-making equipment” isguilty of an offence.19 “Device making
equipment” includes any equipment,

mechanism or impression designed or
primarily used for making an access device
or a counterfeit access device.20 The offence
is less precise than the Canadian model,
in that it does not expressly include the actsof repairing, buying or selling, or importingand exporting forgery equipment. It is also
somewhat more narrow than the Canadianmodel in that it applies to instruments thatare “designed or primarily used” for making
cards. It is, therefore, not clear whether
an instrument designed or generally used
for another purpose, but which is adapted
to use in forgery of credit cards, or whether
blank cards, are covered by the definition.
In California, it is an offence to design,
make, possess, or traffic in card making
equipment or incomplete access cards with
the intent that the equipment or cards beused to make counterfeit access cards.21
This offence is interesting because it
expressly includes blank or incomplete
access cards. Other jurisdictions may stillprohilbit possession of blank cards underanother offence, but California expressly
treats blank cards in the same manner asother instruments of forgery, as Canada
does by implication.
5. Possession, Traffic or Use of Stolen,
Forged or Falsified Credit Card
Just as it is a crime to steal, forge or
falsify a credit, debit or access card, acriminal law should also adequately deter
against the possession of a card knowingthat it has been dealt with illegally in someway. Mere possession of the unlawfully
handled cards creates the potential forserious economic harm.
Trafficking is another problem that must
be addressed. Trafficking involves the
movement or distribution of property.
Some criminal organizations have
20 18 U.S.C. § 1029(e)(6).

19 18 U.S.C. § 1029(a)(4).

21 Penal Code § 484i.

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RESOURCE MATERIAL SERIES No. 55
sophisticated systems in place fortransferring possession of unlawfully
handled cards from person to person; many
people who are involved do not actually use
the cards to make a purchase or to obtain
credit, and they may not remain inpossession of the cards for any significant
period of time. In other cases, individuals
who come into possession of a lost or stolencard, for example, may sell it quickly forprofit, or trade it for other property. This
intermediary phase creates an equally
damaging potential for economic harm andmust be adequately prohibited.
More importantly, while forging,falsifying, stealing and possessing
unlawflly handled credit cards creates thepotential for economic harm and loss, that
potential is fully realized when the cards
are actually used. Credit Cards and otherpayment cards are primarily devices used
for convenient access to goods and services.
It is the purchase of those goods andservices without payment that has major
consequences for a society. Typically, thefinancial institution that issued the card
will bear the cost of unlawful purchases,
but in some cases, the merchant or the
card-holder may be responsible for acertain portion of the loss. Even if the cardissuers generally absorb the cost of
unlawful transactions, it is considered acost of doing business, and so is ultimately
passed on to the consumer in the form of
higher service charges or fees. It isessential, therefore, that the criminal law
adequately prevent the ultimate use ofstolen or forged cards.
In Canada, section 342(1)(c) of the
Criminal Code provides a global offence
that catches each of the above types ofconduct. It states that it is an offence topossess, use or traffic in a credit card or aforged or falsified credit card, knowing that
it was obtained, made or altered by thecommission of an offence, either in Canada

62

or elsewhere. This offence is quite broadin three ways: first, the types of predicate
offences that result in the obtainment,
making or alteration of the card are notspecified, so that it applies broadly to any
offence which could have any of thoseresults, for example fraud; second, thepredicate offence can occur anywhere, evenoutside Canada; and third, the definitionof “traffic” is broad and means “to sell,export from or import into Canada,
distribute or deal with in any other way”.22
Under US federal law, the offences are
set out separately. A person who does thefollowing acts is guilty of an offence:§1029 (a)(1) knowingly and with intent to defraud
produces, uses or traffics in one or morecounterfeit access devices;(2) knowingly and with intent to defraud
traffics in or uses one or moreunauthorized access devices during any
one-year period, and by such conductobtains anything of value aggregating$1,000 or more during that period;(3) knowingly and with intent to defraud
possesses 15 or more devices which arecounterfeit or unauthorized accessdevices;···(5) knowingly and with intent to defraud
effects transactions, with 1 or moreaccess devices issued to another person
or persons, to receive payment or any
other thing of value during any 1-year
period the aggregate value of which isequally to or greater than $1,000;...

Each term is in turn defined, providing
greater clarity. An “unauthorized accessdevice” is a device that is “lost, stolen,
expired, revoked, cancelled, or obtainedwith intent to defraud”. A “counterfeit
access device” is one that is “counterfeit,
fictitious, altered, or forged, or an
22 Section 342(4), R.S.C. 1985, c.27 (1st Supp.), s.44

as am. 1997, c.18, s.16.

110TH INTERNATIONAL TRAINING COURSE
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identifiable component of an access device
or a counterfeit access device”.
Interestingly, it is only possession offifteen or more counterfeit or unauthorizedaccess devices that constitutes an offence,
while with respect to counterfeit devices,use or trafficking in a sigle card is anoffence, and with respect to unauthorized
devices, it is only use or trafficking that
results in the acquisition of property
equaling or exceeding $1,000 that isprohibited. No monetary or quantum
distinctions are made in the Canadian
offence. Although worded differently, both
the Canadian and US federal offence
require knowledge by the accused of theillegal character of the card that ispossessed, used or trafficked. This supplies
the requisite mental element, along withany dishonest intent or intent to defraud.
In New York, a person commits theft ofservices when he “obtains or attempts toobtain a service, or induces or attempts to
induce the supplier or a rendered service
to agree to payment thereof on a credit
basis, by the use of a credit card or debitcard which he knows to be stolen”. 23
Interestingly, this offence seems quite
restrictive, in that it prohibits use of a cardthat is known to be stolen, but not the useof a card that is known to be counterfeit.
Other offences relating to credit cards, suchas possession of stolen cards and possessionof forged cards, are subsumed under the
more general laws applicable to those
offences.
6. Use of Revoked or Cancelled Card
In addition to the use of a card that may
have been obtained or altered illegally, alegitimately issued card can be used beyond
its expiration or cancellation date, or after
it has been cancelled on account of theft orloss. This results in equally direct financial

loss to the card issuer.
Revoked and cancelled cards areincluded within the definition of“unauthorized access device” in the US
Federal Code, and consequently dealt
together with stolen cards and cards
otherwise obtained with intent to defraud,
as noted above. Therefore, in addition tothe offence of using revoked and cancelled
cards, it is also an offence to knowingly andwith intent to defraud possess fifteen or
more revoked or cancelled cards. As
possession of revoked or cancelled cards is
not in itself wrongful, an intent to defraud
is also required in addition to knowledgeof the card’s character.
In other jurisdictions, revoked andcancelled cards are dealt with separatelyfrom forged or stolen cards. For instance,in Canada it is a separate offence to use “acredit card knowing that it has been
revoked or cancelled”.24 Similarly, in New
York, a person commits an offence when,“in the course of obtaining or attempting
to obtain property or a service, he uses ordisplays a credit card, debit card or publicbenefit card which he knows to be revokedor cancelled”.25 As these two jurisdictions
have treated the use and possession offorged and stolen cards separately from useof revoked or cancelled cards, there is noneed to require an intent to defraud, in
addition to knowledge, in respect of theoffence of usage.
7. Unlawful Use of Credit Card Data
One of the unique features of credit cards
is that, unlike other forms of property, thevalue lies in the account information thatis accessible by the data programmed intoor embossed on the card. The card itself
has little economic or other value. For thisreason, the information alone, even in the
24 Section 342(1)(d).

23 CLS Penal Law § 165.15.

25 CLP Penal Law § 165.17.

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absence of the card, can be used unlawfully.
For example, a person who knows thename, number and expiration dateembossed on a card can use that
information to obtain goods and services,
without any need for presenting the card;for example, over the telephone orc o m p u t e r, o r b y m a i l o r d e r. T h i s
information can be obtained in any numberof ways, from observing an actual card andremembering the data, to obtaining carbon
copies discarded by the card-holder, tointercepting a card in the mail, to amerchant taking a second electronic
recording of the card’s magnetic stripe.
Fraudulent use of credit card data or
information is on the rise. In Canada, a
recent phenomenon known as “skimming”
has been observed by law enforcement.
This practice involves a merchant double
swiping a card, effectively capturing andrecording the relevant data on the second
swipe. The data is later transferred onto a
Internet false or counterfeit card. The
Internet is an entire new area of concern
in the fight against credit card crime. For
Instance, websites have been identified
that contain lists of stolen card numbers
and account numbers; the information isavailable to anyone to obtain and use for
their own purposes. As well, law
enforcement have discovered that security
systems of internet commerce have beenbreached, and credit card intformation sent
over the internet to merchants has beenintercepted, recorded, and used to makecounterfeit cards. With so much commerce
taking place over the telephone andthrough computer networks, actual use ofcards is diminishing in frequency. In theabsence of a law that clearly prohibits
unlawful use of the critical data, credit card
crime will continue to be a major concern.
In Canada, this problem is addressed
specifically by section 342(3) of the
Criminal Code26 which reads:

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Every person who, fraudlently and without colourof right, possesses, uses, traffics in or permits
another person to use credit card data, whether or
not authentic, that would enable a person to use acredit card or to obtain the services that areprovided by the issuer of a credit card to credit card
holders is guilty of [an offence].

United States federal law takes a moregeneric approach: the definitions of “accessdevice” includes account numbers or othermeans of account access, so that every
offence related to access devices applies
equally to access device data or
information.
In California, it is a specific offence27 fora person to:
publish... the number or code or an existing,cancelled, revoked, expired or nonexistence accesscard, personal identification number, computer
password, access code, debit card number, bankaccount number, or the numbering or coding whichis employed in the issuance of access cards, with
the intent that it be used or with knowledge orreason to believe that it will be used to avoid thepayment of any lawful charge, or with intent to
defraud or aid another in defrauding...

This section defines “publishes” to mean“the communication of information to any
one or more persons, either orally, in personor by telephone, radio or television, or on acomputer network or computer bulletinboard, or in a writing of any kind, including
without limitation a letter ormemorandum, circular or handbill,newspaper or magazine article, or book”.28
As well, California also makes it a specificoffence to acquire access card accountinformation with respect to an access card
validly issued to another person, without
the cardholder’s or issuer’s consent, with
26 R.S.C. 1985, c. C-46 as am. 1997, c.18, s.16(2).
27 Penal Code § 484j.
28 Ibid.

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
the intent to use it fraudulently.29
8. Merchant Fraud
Credit card crime can be especiallydifficult to detect and prosecute where amerchant participates in the unlawful
activity. California has enacted laws that
directly address the merchant.30
Every retailer or other person who, with intent to
defraud:(a) Furnishes money, goods, services or anythingelse of value upon presentation of an access card
obtained or retained in violation of Section 484e oran access card which he or she knows is acounterfeit access card or is forged, expired, or
revoked, and who receives any payment therefor,
is guilty of theft. If the payment received by theretailer or other person for all money, goods,
services, and other things of value furnished inviolation of this section exceeds four hundred
dollars ($400) in any consecutive six-month period,
then the same shall constitute grand theft.
(b) Presents for payment a sales slip or otherevidence of an access card transaction, and receives
payment therefor, without furnishing in thetransaction money, goods, services, or anything elseof value that is equal in value to the amount of thesales slip or other evidence of an access cardtransaction, is guilty of theft. If the difference
between the value of all money, goods, services, andanything else of value actually furnished and thepayment or payments received by the retailer orother person therefor upon presentation of a sales
slip or other evidence of an access card transaction
exceeds four hundred dollars ($400) in any
consecutive six-month period, then the same shallconstitute grand theft.

California deems the obtaining of
payment from the card-issuer, in thecircumstances described, as theft. Other
jurisdictions, however, address suchconduct under the general offences of
29 Penal Code § 484e(e).
30 Penal Code § 484h.

“fraud”; i.e. payment by the card-issuer was
voluntary and consensual, but was
obtained as a result of deceit or false
pretences by the merchant.
C. Jurisdictional Issues
Technological advances have created asystem of electronic commerce that does
not require the merchant and the cardholder to be in the same location.
Purchases are regularly made over the
telephone or computer using only the
information contained on a credit card; themerchant and card-user being in different
countries. Moreover, people who own credit
cards can travel great distances, acrossborders, and use the card far from theirresidence or the location of the card-issuer.
Each of these types of cases can resultin jurisdictional problems when a crime iscommitted. Is the crime committed in theplace where the card or its information isstolen? In the place where the person iswhen he or she makes an unlawfulpurchase? In the place where the merchantis located? In the place where the cardissuer is located? Which location has
jurisdiction to prosecute? The law should
account for the various possibilities andprovide mechanisms for prosecuting
offenders even where much of the criminala c t o c c u r s o u t s i d e o f a c o u n t r y ’s
jurisdiction. Of course, there arelimitations to the extra-territorial
application of a country’s criminal laws, but
certain mechanisms can reduce thecriminal’s ability to evade prosecution.
In Canada, section 342(1)(c) makes it
an offence to possess, use or traffic in a
credit card or a forged or falsified card,knowing that it was obtained, made oraltered either by the commission in Canadaof an offence, or “by an act or omission
anywhere that, if it had occurred in
Canada, would have constituted an
offence.” Thus while the accused’s act of65

RESOURCE MATERIAL SERIES No. 55
possessing, using or trafficking must occur
within Canada, the circumstances that
render the character of the card as being
unlawful can have arisen anywhere and byanother person.
However, even with respect to conduct
such as use or trafficking, portions of the
conduct may often traverse a border. For
example, trafficking or using a card may
involve a transborder transaction, such as
sale or distribution of the card across aborder, or the purchase of goods across aborder with use of the card. In the case oftransborder conduct, where is the offence
committed?
It is important that states have flexible
jurisdictional laws in cases of transborderoffences, particularly given the increase ininternational commerce by individual
consumers. In Canada, an offence may besubject to the jurisdiction of Canadian
courts if a significant portion of theactivities constituting the offence took
place in Canada. It is sufficient that there
is a real and substantial link between theoffence and Canada. For this purpose, thecourt must take into account all of therelevant facts that occurred in Canada
justifying a prosecution, and consider
whether there is anything in those facts
that offends international comity such thatthe court should refrain from exercising its
jurisdiction.31
With respect to the jurisdiction of thecourts as between internal territorial
jurisdictions within Canada, a prosecution
in respect of credit card offences can occur
not only in the place where the offence wascommitted but also in the place where theaccused is found or arrested. This issignificant in a country as geographicallylarge as Canada. The cost of transferring
31 Libman v. The Queen (1985), 21 C.C.C. (3d) 206(S.C.C.).
32 R.S.C. 1985, c.27 (1st Supp.), s.44.

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an accused back to the place where theoffence was committed can dissuade thecommencement of a prosecution. Section
342(2) of the Criminal Code32 states that:
An accused who is charged with an offence undersubsection (1) may be tried and punished by any
court having jurisdiction to try that offence in theplace where the offence is alleged to have beencommitted or in the place where the accused isfound, is arrested or is in custody, but where theplace where the accused is found, is arrested or isin custody is outside the province in which theoffence is alleged to have been committed,noproceedings in respect of that offence shall becommenced in that place without the consent of the
Attorney General of that province.

D. Evidentiay Matters
Due to the jurisdictional complications
in credit card crimes, a trial may take place
far away from some of the victims or
witnesses who are required to testify about
the ownership or possession of the card, orsomething else in relation to its character.
For example, the card may be used in one
jurisdiction, or part of a country, while thecard-issuer and lawful card-holder are
located elsewhere. The law should provide
for evidentiary rules that facilitate theoccurrence of trials in locations far fromsome of the witnesses.
As noted earlier, in Canada, it is possible
to conduct a trial involving a credit card
offence not only in the place where theoffence is alleged to have been committed,
but also in the place where the accused isfound, is arrested or is in custody. Any oneof these places can be far away from theplace of residence or business of the cardissuer or the card-holder. In Canada, anevidentiary provision facilitates the proofof essential issues that can be provided bysuch witnesses. Section 657.1 of the
Criminal Code33 reads.
33 R.S.C. 1985 c.23 (4th Supp.), s.3; S.C. 1994, c.44

s.63; S.C. 1997, c18, s.79.

110TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS(1) In any proceedings, an affidavit or a solemn
declaration of a person who claims to be thelawful owner of, or the person lawfully entitledto possession of, property that was the subjectmatter of the offence, or any other person who
has specialized knowledge of the property or ofthat type of property, containing the statements
referred to in subsection (2), shall be admissiblein evidence and, in the absence of evidence tothe contrary, is evidence of the statements
contained in the affidavit or solemn declaration
without proof of the signature of the person
appearing to have signed the affidavit or solemn
declaration.
(2) For the purposes of subsection (1), a person shallstate in an affidavit or a solemn declaration(a) that the person is the lawful owner of, or islawfully entitled to possession of, theproperty, or otherwise has specialized
knowledge of the property or of property ofthe same type as that property;(b) the value of the property;(c) in the case of a person who is the lawful
owner of or is lawfully entitled to possessionof the property, that the person has been
deprived of the property by fraudulentmeans or otherwise without the lawfulconsent of the person;(c.1) in the case of proceedings in respect of an
offence under section 342, that the credit
card had been revoked or cancelled, is afalse document within the meaning ofsection 321 or that no credit card that meetsthe exact description of that credit card wasever issued; and(d) any facts within the personal knowledge ofthe person relied on to justify thestatements referred to in paragraphs (a) to(c.1).
(3) Unless the court orders otherwise, no affidavit
or solemn declaration shall be received inevidence pursuant to subsection (1) unless theprosecutor has, before the trial or otherproceeding, given to the accused a copy of theaffidavit or solemn declaration and reasonable
notice of intention to produce it in evidence.

(4) Notwithstarding subsection (1), the court may
require the person who appears to have signed
an affidavit or solemn declaration referred toin that subsection to appear before it for
examination or cross-examination in respect of
the issue of proof of any of the statements
contained in the affidavit or solemn declaration.

These provisions greatly facilitate theprosecution of trans-Canadian andtransnational offences related to property,
including credit cards.
E. Procedural Matters
Other peripheral matters are also ofgreat importance in the criminal justicesystem’s fight against credit card crime.
Without being exhaustive, certain matterswhich are useful include:• the power to seize and, upon conviction,
forfeit instruments for counterfeiting or
forging credit cards.
• provision for wiretap authorizations todetect and gather evidence of credit
card and other organized criminal
activity.
• provision for seizing and, uponconviction forfeiting the proceeds ofcriminal activity, including credit card
crime.
In Canada, it is clear that the first twoof the above noted procedural measures canbe applied in the investigation andenforcement of credit card crime.34 With
respect to seizure of proceeds of crime,
while the provisions do not apply
specifically to credit card offences, theproceeds obtained by such criminal activity
can be seized within the context of the moregeneral offences of theft, forgery, utteringforged document, and fraud.35

34 Sections 183 and 342.01(1) respectively.
35 Section 462.3.

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III. CONCLUSION
Modern technology doubtlessly improves
our lives in countless ways. In the realmof commerce, it allows us to search theworld for a product or service that serves
our needs and desires, with just the clickof a few buttons. More importantly, we canacquire that desired thing of value, nomatter how far away it is, with amazing
ease and convenience. It is as simple asreading off a few numbers over a telephoneline or punching them into a computer
keyboard. Moreover, we do not even haveto pay immediately. The immediate cost isborne by one of numerous credit cardcompanies, who in turn request payment
from us at a later date.
As noted at the outset of this paper,
however, this technology brings more thanjust convenience. It also brings
opportunity; opportunity for clever
criminals to wreak economic havoc on a
global scale. With each new technologicaldevelopment designed and intended tomake our lives more comfortable andconvenient, there comes a corresponding
potential for criminal activity. It is adiffcult but not an insurmountable task todiscern what laws are needed to combat
existing modes of credit card crime; that iswhat this paper has attempted to do. The
first challenge will be for criminal laws to
keep pace with current and future
developments. The second challenge will
be to ensure that similar laws exist in all
countries in order that differences between
the laws of states cannot be exploited tothe benefit of clever criminals.

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