Computerworld - Todd Shipley is a member of the Reno Police Department's Financial/Computer Crimes Unit and he wrote this article for Computerworld's Security Community.
Would you like to know how to make a lot of money from your online business? No, it's not an investment scheme, or a high-tech stock or initial public offering gamble. It's your own company. "How," you ask, "am I going to make a lot of money from my own company?" Well, you take credit cards for purchases online. What could be better then getting involved in a part of the e-commerce economy that's still booming?
Did I mention that it wasn't you who was going to make a lot of money?
Online fraud is a problem that's increasing exponentially. Auction fraud, pyramid schemes, chain letters, you name it -- it's out there online. Credit card fraud is the bread and butter of not only small-time crooks but organized criminals as well -- not all of which are even within the reach of U.S. law enforcement. Credit card fraud can potentially take a lot of money from any business that decides to add an online presence to its company. For small businesses, the opportunity to compete in a larger market, like the Internet, is a huge lure for people interested in profits. The pitfalls, though, can destroy a small business in a single transaction. It can also have long-term effects on larger ones.
A medium-size online company that sold computers and software online recently went the way of many Internet start-ups -- it closed its doors. The company had many of the usual start-up problems -- a quick expansion, several moves to larger office space and unchecked fraudulent purchases from its online sales. In six months, the company lost $100,000 in charged-back credit cards from purchases made by people using stolen credit card numbers. Larger companies may be able to absorb such a loss, but for this company, it was one of several things that led to its collapse. What this company found out too late was that organized criminals from a former Eastern Bloc state had targeted U.S. companies that took credit cards online and did little to validate that the transactions were good.
Could it have been avoided? Certainly. Although law enforcement can't help with poor management, we can help with those people who are knocking on your door and trying to rob you every day. And that is exactly what online credit card fraud is, someone showing up at your door in a mask
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