The potential for credit card fraud had increased dramatically over the past 10 years with the growth in popularity of purchases by telephone and e-mail, a judge has been told.

Circuit Court President Mr Justice Esmond Smyth heard it was not necessary for the criminal to have possession of a stolen card to pay for services or goods ordered over the phone or on the Internet. In order to carry out "electronic" fraud it was only necessary for the fraudster to know the Visa card number, the name of the holder and the expiry date of the credit card.

Ms Grainne Hartigan, a manager at Allied Irish Bank's Credit Card Centre in Ballsbridge, Dublin, said there were two types of bank-retailer transaction agreements. In face-to-face transactions, where a credit card was presented by its owner who then signed for the goods, the bank guaranteed payment to the retailer up to a pre-agreed limit or any higher amount for which authorisation had been previously obtained through direct contact with the bank.

Mail order agreements differed in that authorisation by a bank was limited to confirmation that the card number being used in the electronic deal belonged to the person named in association with it. Authorisation did not guarantee payment on the transaction.

Ms Hartigan told Mr Alistair Rutherdale, counsel for AIB, that it may take up to eight weeks for a card-holder to discover through his or her statement that a fraudulent purchase had been made by use of his or her credit card details. In cases where the victim card-holder had not participated in the transaction, that card-holder's account was credited with the loss. In turn, the account of the retailer hit for the fraudulent transaction was debited by the bank. Under mail/telephone order agreements, it was the retailer who took the hit.

Mr Justice Smyth said people should be very wary about details of their credit cards falling into the wrong hands. From what he had heard, it was obvious that a fraudster could order theatre or cinema tickets, or make other more expensive purchases over a period of up to eight weeks before a genuine card-holder found out his or her card details were being used in fraudulent transactions.

Judge Smyth said there was an extraordinary gap in the worldwide system regarding authorisation of credit card payments and check-ups on electronic transactions.

There was a necessity for a common-sense answer to be found. Judge Smyth refused, for lack of essential evidence, an AIB appeal against a District Court order directing it to repay £4,000 debited from the account of retail jeweller Thomas Gear Ltd, Mary Street, Dublin. He made no ruling on the validity of bank-retailer Visa agreements.