Computerworld
Quick Menu
Search



Ads by TechWords

See your link here


Subscribe to our e-mail newsletters
For more info on a specific newsletter, click the title. Details will be displayed in a new window.
E-Business
Networking
Computerworld Daily News (First Look and Wrap-Up)
Computerworld Blogs Newsletter
The Weekly Top 10
More E-Mail Newsletters 
Computerworld 2007Subscribe to Computerworld
40 years of the most authoritative source of news and information for IT leaders.

E-Merchant Beware

 

Sign up to receive Internet Business Resource Alerts

June 18, 2001 (Computerworld) -- After credit card fraud started hitting Dave Bundtzen's Internet job-placement business at a rate of 3.5% of all transactions, a single fraudulent charge of $19.95 wound up costing him $64.90.
Credit card companies measure fraud in chargebacks -- the transactions involved in clearing up the bogus charges. On the Internet, those chargebacks run more than three times higher than all other credit card processing mediums combined, according to estimates by Visa International.
A fraud rate of 1% (of gross credit card sales) earns a merchant a "high risk" rating. High risk means high chargeback fees to the merchant. And it's those charges, along with return fees to customers and returned merchandise, that nearly put Bundtzen's company, Phoenix Interactive, out of business.
"Merchants are 100% responsible for the chargebacks in card-not-present charges. Carders are putting the smaller e-merchants out of business. And no one is going after the carders," says Dan Clements, CEO and founder of CardCops in Malibu, Calif.
Clements has been tracking a growing number of Internet "carders" - credit card fraud artists - who are emerging from or joining forces with criminal clans in Russia, Japan and the U.S. Last month, Clements formed CardCops to provide an investigative service for e-merchants.
Other services are popping up around electronic retail fraud losses, as well. For example, CyberSource now offers an e-merchant fraud-detection scoring system based on behavioral and pattern analysis. With this system, consumer orders at 3 a.m. using a post office box for a shipping address would get a "high probability of fraud" score.
And the CyberSource system ties into Visa's neural fraud-detection network that tracks fraud reports. This network improved Visa card transaction accuracy by more than 50%, according to Jean Bruesewitz, senior vice president for advanced risk solutions at the company.
Also, Visa last fall piloted a payer authentication program called 3D Secure that's based on digital certificates. This directory service verifies a shopper's authenticity through issuing banks participating in the program.
"If you look at the difference between store transactions and Internet transactions, what you're really trying to do is find a way to authenticate the customer," Bruesewitz says. "Through 3D Secure, the actual identification is verified by Visa."
Clearly, there are a lot more resources than in the early days of e-commerce when Bundtzen started out. He averted his crises the old-fashioned way: cross-checking incoming orders through his company's own database and using improved call center screening techniques. In so doing, he's now well below the 1% high-risk credit threshold again.
"It really is 'merchant beware,' " says Tom Arnold, CEO of CyberSource. "Small to medium-size e-commerce sites are going out of business" as

Continued...
1 | 2 | NEXT  



Print this Story Send Us Feedback E-mail this Story Digg! Digg this Story Slashdot this Story
"India terrorism attack may have demonstrated how satellite images help terrorist groups. But there's no need to worry about it...." Read more...
"Whether it's Black Friday, Cyber Monday, or Stupid Bloody Tuesday, you can find great deals on gadgets and gear this..." Read more...
Read more E-Business & Web 2.0 posts or See all Blogs
New Windows worm builds massive botnet
7 ways to cut your software costs during the economic downturn
How spyware nearly sent a teacher to prison
More top stories...
Windows market share dives below 90% for first time
Major e-stores malfunction on Black Friday and Cyber Monday
Glory days: How high school shaped nine IT leaders
Thin as ever, the latest Air offers up to twice the storage and snappy performance.
We've got an array of economical, expensive, and just plain weird tech gifts for your friends and family.
The spam-spewing 'Srizbi' botnet that was shut down two weeks ago has been resurrected and is again under criminal control, say security researchers.
Facebook is popular and growing -- especially with criminals. Here's why they love it.
Get the latest news, reviews and more about Microsoft's newest desktop operating system
Find wage data for 50 IT job titles.
All Zones
Business Continuity Zone
The File Data Management Zone
Security Management Zone
The SAS Zone
Business Intelligence and Analytics Zone
The Enterprise Search Zone
Software as a Service Zone
The Security Zone

Ads by TechWords

See your link here
The Impact of Social Networks on Mobility Strategies
The Impact of Social Networks on Mobility Strategies
Download this webcast, free, compliments of RIM.
Go to the webcast 
Five Technologies Simplifying Infrastructure Management
Get this white paper now!
(Source: Liebert) Today's data centers must support more devices, are consuming more power and generating more heat. Learn five infrastructure technologies that are making it easier for growing businesses to introduce new IT systems as needed while maintaining high levels of availability.
Download this white paper go
Computerworld Technology Briefing: Meetings @ the Speed of Business
Download this Technology Briefing now, compliments of Microsoft!
(Source: Microsoft) For large organizations, Web conferencing gives a major boost to collaboration among far-flung offices. For smaller companies, experts say Web conferencing is no longer a luxury but a necessity for everything from webinars to customer presentations. But the real value lies in saving soft costs and in increases in productivity.
Download this executive briefing download
White Papers
Read up on the latest ideas and technologies from companies that sell hardware, software and services.
IronPort Encryption Technology: Safeguarding Business Email
Simplifying Enterprise File Management
Brocade and the File Area Network - A Taneja Group Solution Profile
View more whitepapers