RE: UKNM: Re: Credit Card Fraud

[Marcus Austin]

At last someone is starting to listen to what we've been saying for the 

last 12 months. Chargebacks and customer perpetrated fraud is the real 

problem with commerce on the Net, and part of the problem is the credit 

card processing agents and the cc companies. Amongst other things CC 

companies are very slow at passing on stolen card lists and processors 

unintentionally hide a lot of the information that a merchant would find 

useful to check against fraud such as the cc name ie R Branson, multiple 

deliveries to multiple addresses using the same cc details. If i was a 

merchant i'd be asking marbles etc what rights i have against fraud using 

marbles cards, because at the moment it seems to be zero.


I have included some para's from a letter we received recently that might 

help illustrate some of the problems.


Roll on SET !!!


Marcus


The acquiring banks, such as NatWest Streamline and Barclays Merchant

Services, provide online credit card authorisations but these only

involve minimal checking. They check that the card number is

mathematically correct and that it has not been reported stolen or has

expired, but true transaction authorisations are a myth, they do not

occur at the time of purchase. Transaction Authorisations only occur once

the bank issuing the card has been advised of the transaction. This

typically takes between three and six months, leaving the merchant

exposed to the possibility of a "chargeback" long after the goods have

been delivered.


In reality, online authorisation provides the merchant with little or no

reassurance that the card number is not fraudulent. Many of the issuing

banks remain highly secretive about their credit card business and do not

advise the acquiring banks of stolen numbers.  UK card issuers maintain a

list of stolen card numbers for the acquiring banks to check. However,

Continental European banks have, largely, yet to follow this lead, even

UK and US banks still take too long or simply forget to register stolen

card numbers.  The merchant is therefore placed at higher risk of online

fraud.


The Internet businesses that are most vulnerable to online fraud are

those that provide consumers with online authorisation of their credit

card payment using recognised payment processors like WordPay and

Netbanx. Merchants in this situation do not normally see customers'

credit card numbers as these are passed directly to the payment

processor's secure server. Although this may provide the consumer with

more confidence, it prevents the merchant from spotting the signs of

fraudulent orders, for example doubtful sequences of card numbers.


If you are suspicious of a transaction, you need to confirm the

cardholder has made the order. You can't do this unless you obtain the

card number and expiry date from the payment processor and request

verification of the cardholder's address from the acquiring bank. The

acquiring bank then contacts the issuing bank and, if you are lucky, it

will agree to help you in your enquiries. Unfortunately, confirming the

cardholder's address will not always be sufficient and you may need to

contact the cardholder to confirm the transaction is legitimate. For the

consumer, this additional checking can be irritating but for the merchant

it can be the difference between profit and loss.

Marcus Austin - Senior Editor

Internet Works

Future Network PLC,

30 Monmouth St,

Bath,

BA1 2BW

www.iwks.com

tel +44 (0)1225-442244

Fax +44 (0)1225-822744 


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