Online Merchants Protest At Credit Card Pain
Published: Saturday, July 02, 2005 Online-Casinos.com
ONLINE MERCHANTS PROTEST AT CREDIT CARD PAIN
"Share the burden," retailers say to banks
The increasing number of fraudulent online credit card transactions through identity
theft and stolen credit card details has prompted U.S. National Retail Foundation
members to protest at having to shoulder the entire burden.
Consumers are protected by credit card-issuing banks, which waive bogus purchases
and contested cash transfers. Merchants, however, must absorb the cost if the
banks decide they weren't vigilant.
Online merchants, especially small ones, say they are getting stung by the burgeoning
black market for stolen credit cards, reports eCommerce News this week.
And a rash of recent security breaches at Visa USA, MasterCard International,
American Express (see last week's InfoPowa) and others this year could worsen
the problem, says the Federation.
Exacerbating an already bad situation, merchants routinely are stuck with "exorbitant"
bank charges when items are purchased fraudulently.
Thousands of compromised credit card numbers are reportedly floating in cyberspace,
where crooks hawk them, use them to buy goods over the Internet and electronically
withdraw cash from credit card accounts.
"If the bank can assert that the merchant didn't follow certain best practices
and appropriately verify the identity of the customer, then the merchant pays,"
says John Pironti, a security analyst at consultant Unisys.
This approach does not meet with universal approval. One retailer is quoted as
saying, "Why should I pay fees for fraudulent credit card purchases they
(the card issuers) don't catch?"
The costs for fraudulent online purchases should be shared by credit card issuers
who have suffered data breaches, says Mallory Duncan, general counsel at National
Retail Federation. "Under the current system, the retailer is guilty until
proven innocent."
But the nation's largest banking trade group contends merchants knowingly take
on a greater risk when credit card transactions are made online. It is their responsibility
to develop tighter security systems, says Nessa Feddis, an attorney at the American
Bankers Association.
A surefire way to eliminate charge-backs? Here's one not very constructive solution:
"Shut down your Web site," says Ori Eisen, CEO of The 41st Parameter,
which sells software that authenticates online credit card purchases.
