Online security and the way that card fraud is dealt with is an important issue for me, since my primary income comes by taking card transactions online and over the phone. I´d naively like to think that the banks and police work together to track down card fraud and stamp it out so that customers feel safe participating in `customer not present´ transactions.
Occasionally I get a chargeback letter from the merchant services department of my bankers telling me that someone has used fraudulent card details on my site and as such the money is recovered from my business bank account and returned to the genuine card holder. I´m assuming that this is the same with all Internet companies, and whilst I´m absolutely fine with the principle I´ve just discovered quite how little is done behind the scenes in order to discourage card fraud in the future.
The catalyst for my rant today was that a couple of days ago my business card details were compromised although the card was still present in my wallet, and as a result someone started purchasing goods to be delivered to an address in Kent. Whilst on the phone to the bank to get my money back I explained that I was actually an online merchant myself, and that I wanted to know what steps the bank were going to take. In my mind they had the delivery details of where the goods were going so the police should be informed but I was told that all that would happen is the money would simply be charged back to the retailers.
Now, let me explain something about chargebacks. Say a customer comes on to a website and buys £1,000 worth of goods using a stolen credit card. What happens is the retailer pays around 1.5% of that amount (£15) straight to the merchant bank as a processing charge and then once the cardholder reports his card stolen the merchant gets penalized an additional £5. Basically this means that the bank has turned over £20 out of the retailers´ misfortune and on top of this the retailer is left £1,000 out of pocket for the goods which were dispatched in good faith.
With the bank being held completely irresponsible for any of the costs it´s not really surprising that working with the police is bottom of their list of priorities. Literally no money has been lost by them since all the stolen money gets charged back to the merchants who are unable to defend themselves against chargebacks and the banks actually end up making money through their fixed and variable fees.
When asked about this the woman working for the fraud investigation team at the Bank of Scotland said that none of this was her concern and that the bank wouldn´t be talking to the police or trying to track the fraudster who used my card to rip off dozens of merchants.
Apparently the chargeback was the retailers problem but since the police don´t care about customer not present card fraud the only thing the retailer could do would be to physically drive to the delivery address and have words with whoever answered the door - something I have been sorely tempted to do on a number of occasions!
At this point the woman uttered the words which made me lose the calm that I had maintained for the entire conversation until this point. Apparently as a retailer if I´m not happy then the official line from the Bank of Scotland fraud investigation team is `you should take more care who you send goods to then, shouldn´t you?´ The woman I spoke to today is employed simply to force chargebacks off merchants but resents the implication that for their extortionate fees the bank should do ANY kind of investigation at all. Additionally the police don´t care and this is probably the reason that in 2005 online fraud rose by 90% - If I walked in to a shop and stole £2,000 out of their till I would expect to be charged but you do the same online and not the slightest bit of effort is made to attempt to track you down.
Members of the public are completely protected by online fraud so this shouldn´t put any readers off ordering online in the future however surely, in this day and age not only should the merchants be protected to a certain extent but additionally we should also make an effort to ensure that those benefiting from organized crime are brought to justice?!
Computer Articles 2007
