Watershed Credit Card Fraud Article !!
Brad, I think you have found the best article, to date, to frame the e-commerce fraud problem. Unfortunately it stops short of identifying the solution to the problem - biometric authentication of credit cards.
Bookmark this article ! It clearly identifies the need for Mastercard to get off their butt and adopt Identix biometrics throughout their network. The early adopters have an opportunity to capture the lion's share of small to medium size Ecommerce business clients.
zdnet.com
Selected excerpts follow ---
Recently, Kelt Reeves was ready to join the rest of the e-business-bound world and launch his company's first business-to-consumer site to sell $4,000 computer gaming systems. Then Reeves had a thought that gave him pause: What if the site turned into a magnet for fraud artists with phony or stolen credit card numbers? Could his small $3 million company survive an onslaught of bogus sales?
One check with credit card issuers confirmed his fear: As in the brick-and-mortar world, if he shipped goods to a crook, he'd be financially responsible?even if the card issuer had given him a verbal OK on the transaction. Reeves, president of Falcon Northwest Computer Systems Inc., in Ashland, Ore., immediately put a hold on his e-commerce plans.
"It's taking us forever to get our e-commerce site up and running," Reeves said. "The credit card companies didn't have a whole lot of answers for us when we asked how to protect ourselves. ... How do we cover our butts?"
Fraud rates can reach 30 percent for sites selling certain types of merchandise, such as software, online merchants report.
Use Neural Network Fraud Detection Systems? Not!!!
"We've found very few merchants with advanced fraud detection systems in place," such as neural network systems that compare new transactions against profiles of fraudulent ones, Hickman said. Only 2 percent to 4 percent of Web merchants use such systems today, mainly because of their cost, Meridien's research shows. Providers of such fraud detection services typically charge one-time fees of tens of thousands of dollars on top of per-transaction fees. That has put these services out of the reach of many e-commerce enterprises.
Stop Gap Attempts at Authentication Are Leading Down the Path to Biometric Identification
"Now we ask for the 800-number listed on the back of the card, along with the last four digits of the customer's Social Security number or their mother's maiden name," he said. "It makes some people nervous, but they provide it. If they hang up, we're pretty sure it would have been a fraudulent transaction."
Please read the whole article. |
