The MSNBC article had a blaring headline, “One in every 20 consumers has been the victim of credit card fraud in the past 12 months and one 1 in 50 has been the victim of identity theft.” Actually, it was 5.2 percent of every 1000 online adults in the United States were victims of the fraud and 1.9 percent of the people were victims of identity theft—but that’s nitpicking the numbers. Importantly, the victims of identity theft didn’t know if their identity was stolen online or offline. Either way, it is scary to know that online thieves stole more than $700 million dollars. This loss of 1.14 percent of total online sales means that online fraud was 19 times the dollar numbers of offline fraud. This finding was done by a recent survey by Gartner Inc.

One point to remember is that online sales loss doesn’t only happen in actual fraud cases but also when it is a perception of fraud. For example, often some of the larger e-commerce sites have a sales rejection rate of 7 percent because of suspicious transactions. Furthermore, the average rejection rate is about 5 percent. This kind of news is of concern especially since e-commerce is back on the rise. As merchants find this good news a green light to sell more products and invest in online sales, crackers see it as a broader avenue to cheat consumers.

Presently, the merchant has to absorb the loss. However, credit card companies, merchants and consumers are worried about this trend and are working to stop this leak of online revenue. What are some of the options being laid out by credit card companies to stop this problem?

Visa:
Visa, one of the largest credit card companies in the world has a program called Verified by Visa. Participants of this program sign up to register their cards. These cards enable the user to have a password. Once activated, the card and the user’s password can be used at participating merchant sites. This way, the merchant does not have to deal with the fraud problem even if the number is stolen. However, the card can still be used on sites where the merchant has not signed up for the Verified by Visa program but still accepts the regular card. To learn more or sign up for this card, please check the link at the resource box below. The link also has information on how to get a current list of participating vendors. If you are an online merchant, it may be wise to try and get on this list.

Master Card
MasterCard has developed a Universal Cardholder Authentication Field (UCAF). This allows buyers’ authentication data to be passed among issuers, merchants and acquirers while they promise that the consumers’ personal payment information is secure.

Additionally, their Secure Payment Application (SPA™) program uses this UCAF to “provide explicit evidence that a transaction was originated by the authorized party” so that the merchants’ chargebacks will be significantly reduced.

MasterCard also has a Site Data Protection Service™ (SDP), which incorporates several programs to minimize the chance of a merchant being hacked. Finally, MasterCard has a few other programs such as insurance to help the online merchant. Please check the links below for further information.

For more information, please follow the links in the resource box below:

American Express
Although, the MSN article stated that American Express is “working on a password-based security mechanism,” I found no indication of that at their site. However, they do have a site set up with some really good documents on fraud as well safety procedures. You do need to sign up for free to be a member to get to these documents, but it is, nevertheless, good reading. You can find the site’s link in the resource box below.

Today’s article is an in depth investigation by Murdok’s very own Peter Thiruselvam. We’re proud of his latest work, and think it will be useful to our Internet community.