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US bank approves ripped-up credit card application

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A US man who sent in a torn up, and taped back together, credit card application as an experiment to see whether he needed to shred his applications has received a credit card. Rob Cockerham used his father's address and his mobile (as opposed to land line number) when making an application for a JP Morgan Chase credit card.

A spokesman for Chase described the experiment as an internet prank. He insisted that Chase takes fraud seriously and pointed out that the bank was obliged to process credit applications, whatever condition they are received in. Applications that arrive in damaged form are transferred to an electronic format, he told MSNBC. Common sense would suggest that a taped up application would arose suspicion if handled by a human but Chase maintains Cockerham's application was properly approved, presumably because the details of the address he gave referred to a previous residence.

It's easy to imagine a fraudster submitting a torn up application but from the point of view of credit card companies, if not consumers, the risk is worth it, as net security guru Bruce Schneier points out.

"All other costs and problems of identity theft are borne by the consumer; they're an externality to the credit card company. They don't enter into the trade-off decision at all," Schneier writes. "We can laugh at this kind of thing all day, but it's actually in the best interests of the credit card industry to mail cards in response to torn-up and taped-together applications without doing much checking of the address or phone number. If we want that to change, we need to fix the externality." ®

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