Credit Card Fraud is Out of Control
The challenge with credit card fraud is that as it is typically an interstate fraud, meaning happening from one state to the next, the cost and time to prosecute is typically beyond the crime itself as it would cost more to extradite a person even across country for a crime typically no more than a few thousand if not a few hundred dollars.
A victimless crime, why bother, huh? The fact is that there are thousands, nay, hundreds of thousands of victims of credit card fraud and what’s worse is not only do these victims pay for the fraud, they can take every step imaginable to prevent it and are still paying the bill. The end result is that merchants foot the bill for online chargebacks. You didn’t think it was the consumers or the banks, did you? While arguably banks share some of the cost in credit card fraud, when you consider banks like Bank of America (NYSE BAC) almost benefit from allowing it to happen whereas innocent online merchants can often find themselves in bankruptcy over a terminated merchant account, is there really any comparison?
Fact is, the toughest problems often have the easiest solutions and this is really one of them. While arguably a person should be made to pay for their crimes in the venue where the crime was ultimately committed, meaning if you steal a credit card in New York but charge that card online for a California business, the law says typically you would have to show up in California to pay for that crime, but why? Certainly I can understand jurisdiction and the idea being extradition laws but when you really think of it if I am in New York and am punching that card number into my New York computer, I should pay for that crime whether I charged something online at a business located in New York, California, or Idaho.
The reality is that identity theft and online credit card fraud are reaching epidemic proportions and the FBI is really just overtaxed and local law enforcement, no matter how much they want to, just don’t have the resources to enforce interstate crimes. The reality is they shouldn’t have to. If someone commits a crime in your backyard, the community should have every right to have that person prosecuted for that crime whether it be in your backyard or not. I’d like to know that if my neighbor just stole $10k worth of computers using a stolen credit card that they don’t get away scot-free, just because they bought the items from a merchant 2,500 miles away. Just reminds me of the old days where kids would use credit card generators to get away with stolen AOL access, well clearly it was wrong 10 years ago and this is wrong today, the difference being that these aren’t kids wanting to get their $2.50 an hour porn downloads for free, but rather small businesses just trying to work towards the American Dream.
Ultimately, I do understand the legal implications to this problem but the reality is those should be second to the fact that billions are being lost simply because of this jurisdictional loophole. The laws made to protect the innocent from pointless cross country lawsuits, ultimately forcing the prosecuting party to fight the matter shouldn’t result in so much loss in time and revenue for innocent merchants. While I know if, and more likely when, this issue changes, that there will be abuse but isn’t that worth something? Change isn’t easy but ultimately it’s necessary to move forward and when 30% of my Google alerts on fraud now involve the average perpetrator getting away with their crime that’s just too much already.
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As long as Merchant Services do not get hurt by the actions of criminals and only pass the buck on ...
First of all, this is a great forum...so thanks.
I would have been betting on someone from the financial services industry ...
Only time will tell. but for my take, I found it fascinating how merchant account providers are continuing to find ...
Good post. You make some great points that most people do not fully understand.
"Ultimately, with the banks fitting the bill ...
Merchant Warehouse is an ISO (Independent Sales Office). Paypal is not even in the same realm. Paypal is like western ...
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Comment by Tom Mahoney on 18 February 2008:
This is an excellent point and I’m all for it. Of course it’ll take years; Congress doesn’t even see the credit card industry as a problem yet, let alone common theft.
But gee… Wouldn’t it make sense if the issuing banks were willing to acknowledge that E-commerce merchants know a few things too and were willing to actually listen when a merchant calls them to report an obviously fraudulent transaction?
There’s a concept that would stop a lot of fraud too but then, why would the banks and the “card company” want to stop on-line fraud. They do profit from it after all!
Comment by Mark Taylor on 19 February 2008:
I have some sort of an anxiety reaction with using my card online these days with news of credit card fraud comes up every now and then and the amount which is being stolen really makes me to even get rid of those credit cards. I hope there will be a permanent solution for this ever increasing menace of credit card fraud.
Comment by Remote-Backups with Webaccess on 19 February 2008:
As technology improved the rate of crime rate also increased according to those growth,So best idea is to monitor the system by remote access.
Comment by Merchant Services Online on 21 February 2008:
I know my Merchant Provider VeryPay has helped a few of my customers with improving scrubbing technologies and reducing risk as well, each merchant needs to really concentrate on security of their online technologies to insure safety of the transaction.. Using Tools such as ScanAlert and other tools to run PCI Compliant Scans can dramatically decrease your risks as a merchant.
Also for larger companies it is recommended to perform penetration tests to address any server vulnerability risks to eliminate risk of a hacker attack. There are many companies out in the industry that can perform these tasks I would recommend using people like NetStandard since they have certified CISSP engineers with many years of experience in detecting networks vulnerabilities and can suggests goals for improvements to secure your network.
Comment by Stephen Gross on 22 February 2008:
There was an incident with my friend where he used his credit card info was stolen and has been used to book flight tickets where you don’t need any personal info to be true. And it went on very easily for that guy and he went scot free even after my friend has launched a complaint against this issue and he ended up paying the bills which he did not use!
Comment by DayDreamer on 24 February 2008:
With advances in technology, thieves become advanced too. with the use of proxies, VPN etc card frauders now escape themselves many of times. just search on G and u ll find lots of stolen card information freely available on forums etc i don’t know what cyber laws are made for. every country should unite and make a common cyber code of conduct.
Comment by blogsha on 24 February 2008:
Credit card fraud. People should actually be aware of it and if they are victims they should take some instead of paying the bill . There should be a solution to these credit card frauds. I have started using a vcc instead of using my own credit card.
Comment by swap on 24 February 2008:
I feel very unsecure using Credit cards for online transactions, Credit Card companies need to come up with some sort of security mesures to prevent thes frauds.
How can they keep all the info in one place, if someone get physical access to your card you are in big trouble.
Comment by Rootkit on 24 February 2008:
I feel unsafe to use my credit card too, with these type of crimes increasing on a daily basis. The people using them should be a little more alert while making transactions and keep themselves updated on the different methods used to scam credit card users.
Comment by khairilhusni on 24 February 2008:
Credit card fraud for online purchases seems to be increasing both in scale and dollar amounts day by day. While this problem may seem to be out of control basic steps can be taken by both consumers and merchants to stem the flow.
Unfortunately, credit card fraud exists to the degree that it does primarily because merchants, whether brick and mortar, or on the internet, do not take the necessary precautions to verify the authenticity of the purchasers.
Comment by Steven on 14 April 2008:
As long as Merchant Services do not get hurt by the actions of criminals and only pass the buck on the merchant and the consumer these issues will only increase to a problem. When the gov’t opens up its eyes to who benefits from such frauds whether they happen or not, the merchant services getting their fees on the transaction in the billions in aggregrate and the that Merchant is not more at cause as they are, expecially with Card not Present transactions! Will this issue be dealt with in the best manner it needs to be. VISA, MC, AMEX, DISC are the big money along with the holding companies, merchant services etc. The Merchant services claim they will screen online transactions heover they dont take responsility for their screenings as you diecide to take the order or not…