Online Credit Fraud
Online Credit Card Fraud
There has been a lot of evidence of credit card fraud when using online services. This means that the payment with a plastic through the Internet will inevitably turn into identity theft and financial losses one day. In general, this type of credit fraud brings the real danger for Internet commerce. Let's find out how serious this danger is, and are really Internet merchants and cardholders helpless against fraudsters. First of all, have a look at some estimates. According to the data of The Federal Chamber of Commerce, the annual damage from credit fraud accounts for more than 2 billion US dollars.
The losses caused by Internet credit fraud occupy around 12% of all the cases. So, what can really threaten the cardholder, who uses his/her plastic online? The answer is obvious - his/her credit card data risks to be stolen. Basically, there have been a lot of cases of credit card data bases theft recently. But the fact of theft itself doesn't bring financial damage, as fraudster has to find the way to use the funds on credit card account. There are different ways. The main are to transfer the money somewhere they can withdraw them, or making payments with these credit cards online.
Among the international payment systems (Visa, MasterCard, American Express, Discover) there is a concept of issuing bank, which gives a plastic to a cardholder, and acquiring bank, which provides the acceptance of cards for payment. When a cardholder makes a payment, the info on his credit card goes to the acquiring bank and then to the issuing bank.
The issuer checks the information on credit card and a cardholder, and may allow or prohibit the transaction. In Internet commerce the acquiring bank bears the responsibility of credit fraud. Very often they shift the liability on the online merchant, and the refund is made by them.
The first conclusion that can be made is that there is no reasonable ground for being afraid of losing their funds through online payment, because the cardholder has the full right to dispute the transactions he hasn't made, and the bank will have to pay the refund.
The second conclusion is that the most unprotected link in the scheme of Internet purchases is an online merchant. The Internet store will be responsible for all the cases of credit card fraud, so they use the really effective anti-fraud systems.
It still should be mentioned that all the anti-fraud systems don't give the 100% guarantee against credit fraud. Each of the elements of filter can be avoided, but it is a really hard-to-accomplish process.
The payment systems are also developing the new ways of making the Internet transactions with credit cards safer. For instance, the Visa Company has implemented the new anti-fraud technology 3D Secure. The main point of it is that the issuing bank will provide a cardholder with a special password phrase. The password will be known only to the issuer. So even if identity theft happens, there is no way the fraudster can get this password.
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