It's a scenario repeated often throughout the holiday shopping season:
The line in a department store has been growing for several hours and approaches 50 customers deep.
Alone behind the cash register stands a sales clerk with a fixed smile - and an occasional grimace - whose lunch break has been slashed in half to accommodate the holiday crunch.
The customers complain about the wait, and the store manager urges her to pick up the pace.
Did the harried clerk, with a hundred impatient eyes looking on, risk slowing down transactions by checking credit card signatures - a small task that could deter fraud?
Too many times the answer is no, the card associations lament.
Indeed, security experts agree that the human factor plays a critical role in fraud prevention. Yet merchants may not do enough to educate their employees about the risk, they say.
"These are low-paid, high-turnover people who are being rushed," said Jerome Svigals, a Redwood City, Calif., electronic-banking consultant and smart card advocate. "You're coping with the human factor and the reality of the labor involved. All these things are working against fraud prevention."
In the holiday season, when 33% of all credit card transactions take place, MasterCard International and Visa U.S.A. are gravely concerned about credit card fraud.
Visa, in fact, said 40% to 45% of sales at the top 50 merchants occur during the holiday season. "This is it for them - this is when they do their business," said Saundra Meyers, director of service quality at Visa.
In 1994, MasterCard reported a loss of $486 million due to fraud - 0.125% of the New York-based company's annual sales volume. Visa's fraud loss was 0.102%, or $645 million of its annual sales.
"You'll see people coming in later in the evening trying to rush the transaction through, or saying they have a ride waiting for them outside," said Vincent DeLuca, MasterCard's vice president of fraud control, pointing out that criminals will often try to exploit harried clerks this time of year.
"We try to make merchants aware of these and other frauds," said Mr. DeLuca. Once MasterCard gets their attention, merchants are enthusiastic, he said. "They listen, and they want to do the right thing."
For the last 10 years, MasterCard has held fraud prevention seminars during the holiday season. This year, MasterCard plans to conduct seminars in about 80 malls in 24 states.
Gene Moran, fraud investment manager for First Union Bank, noted that "the merchant has always been the first line of defense" in preventing fraud.
"The crook is going to have a decent-looking card, with ID to match it," he said. "Everything might look right, but something smells wrong."
MasterCard's forums, which include video presentations and law enforcement officials, discuss card security features and proper acceptance standards, such as checking the card's expiration date.
Although MasterCard said 61 seminars were conducted last year, with 1,200 merchants participating, a recent visit to a forum at the South Street Seaport in Manhattan found just one merchant in attendance.
Ms. Meyers said Visa runs an annual program that "deals with the top 50 merchants" such as Federated and Wal-Marts. The goal of the initiative, which involves 72 seminars in eight cities, is to educate merchant executives so they can pass the information along to clerks.
"We've shown them how fraud can impact them," she said, noting that merchants can be held accountable primarily in two instances: If the clerk fails to get a signature, or if the clerk fails to get an authorization.
Vigilant employees who take a fraudulent card out of circulation are eligible to receive a $50, $100, or $1,000 reward from Visa, depending on the circumstances, according to Alan Trosclair, Visa's vice president of fraud control.
MasterCard said it offers rewards of up to $1,000 for clerks responsible for the arrest and conviction of anyone convicted of credit-card fraud.
"Part of what we do is to protect our members' profitability," said Mr. DeLuca. "The integrity of our brand is involved."
MasterCard said it tries to work with Visa, Dean Witter, Discover & Co. and American Express Co. to prevent fraud. "We work hand in glove with all the associations on this," said Mr. DeLuca, "It's a noncompetitive issue."
Ultimately, the best weapon against credit card fraud may prove to be advanced technology such as the smart card.
"Technology will provide a respite," said Barry Schreiber, professor of criminal justice at St. Cloud State University in Minnesota. "Magnetic- stripe cards have been known as relatively easy to counterfeit.
"There have been some remarkable successes in reducing credit card fraud in France with the introduction of the smart card - that's the next obvious leap of technology that will take place in this country," said Dr. Schreiber, who estimated this would take about 10 years to happen."
In fact, Visa and MasterCard have been working aggressively in the last couple of years to develop standards for smart cards and are seeking to speed up the timetable for their widespread use.
Until smart cards become widely issued and used, Mr. Svigals has advocated that MasterCard and Visa could cut fraud losses in half by requiring cardholders to key in personal identification numbers.
He claimed that the credit associations have resisted moving to PIN- based transactions because they take longer. "The smart card solves the problem because it has PIN validation built in," he said.
He added that smart cards "would reduce fraud losses by 22% and bad-debt losses by 7%."
Is intensified competition among issuers contributing to the fraud problem? Mr. Schreiber indicated that there's a "wrestling match" going on between card marketers and fraud experts.
"There is intense competition between issuers for new and profitable clients," said Mr. Schreiber. "The marketing folks want to extend the cards to as many people as possible. The security people are getting returned applications from faceless people who may or may not be who they claim to be."
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Visa reported that its retail-transaction dollar volume went up 20.35% the first nine shopping days after Thanksgiving. It increased 18.32% for the Thanksgiving weekend.
Although these figures represent a slight fall from 1994's 25% growth, the total number of retail transactions grew nearly 26%, Visa said. Average retail ticket amounts fell $3 to $69 so far this year.
Visa reported more than 100 million retail transactions and more than $7.0 billion in retail sales for the first full shopping week after Thanksgiving.
