CREDIT CARD FRAUD
Even with the downturn in the economy, the growth of catalog, TV, telemarketing, and eCommerce transactions continues at more than 22% annually. With consumers demanding more freedom and convenience, merchants have been faced with having to accept credit card transactions without having the credit card present and on file. Merchants that took advantage of technologies to reach their customers at any time or place have seen tremendous increases in sales and revenues and reductions in cost of goods.
Unfortunately, there has also been a direct correlation to the tremendous growth in fraudulent transactions. Until recently, companies had to accept a certain amount of fraudulent transactions as a cost of doing business. Today, innovation is about developing and implementing creative solutions to the challenges of reducing fraudulent transactions.
Retailers have learned a valuable lesson over the past few years-an investment in on-line technology is not just about driving new revenue streams; rather, it's an investment in operational efficiency, which translates directly to lower costs and higher sales, in fact it has become a competitive imperative. The outstanding risk to the improvement to the bottom line for retailers relying more and more on on-line and other "card not present" transactions is fraud.
Traditional retail stores can employ more people, more technology, more client identification schemes like finger prints, two picture ID's, check verification systems, credit card verification systems, the list goes on and on. But with on-line transactions how do you look at the picture ID; review a signature; or get the thumbprint on the check? You can't. On-line and other "card not present" transaction fraud has become another in a growing and troublesome cost line in the P&L.
Up until recently solutions that focused on "card not present" fraud problem have been largely unsuccessful, due mainly to the high costs and uncertain technology. While there are a significant number of emerging technologies attempting to deal with this issue Visa/MasterCard have been working at remedying this outrageous situation. The CVV program, which will be in full implementation as of April 2003, will be a much-needed protection for the merchants in all "card not present" transactions.
What is CVV2 and how are you protected? On the back of all V/MC credit cards there are three extra digits which ensure that the person making a purchase in a card not present situation actually has the card in their hand. When used in combination with AVS it will cut down dramatically on the amount of fraudulent charges. You can find more info about CVV2 on the Visa website, www.visa.com.
The majority of card not present sales come from the Internet and these merchants have other tools available as well. Each computer has a unique fingerprint called an IP Address. If used by the merchant they provide additional verification. There are also negative databases maintained by many organizations that you can utilize to scrub your transaction even further to reduce the possibility of fraudulent transactions. Some payment gateways offer this service for a small cost.
The reality of fraud is indisputable and so are its effects to us as individuals and to our economy. The point that should be taken is that to protect yourself you must do something. Whether you educate yourself or hire a fraud prevention specialist/organization you have to do something. We can be reached at any time to assist you. Click here for contact information.
Read more about Internet fraud.
