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  1. #1

    How bad is online credit card fraud? (figures)

    Does anyone have or knows of a site (or resource even if i have to pay) that displays current online credit card fraud rates from a client point of view? I'm doing my thesis and am interested on the mental and physical 'suffering' that clients endure after having their credit card details stolen online.

    Any help would be appreciated.

    Dan

  2. #2
    Join Date
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    I might be able to point you to some resources but... are you talking about from a consumer perspective? Or a merchant perspective?

    There is no real liability to consumers who have their credit card information compromised... they simply charge back the unauthorized purchase and have their credit card replaced.

    The real loss & damage is incurred on the merchant-level from chargeback losses resulting from merchants inadvertently accepting stolen cards, shipping products and then getting their sales funds charged back... losing both the product as well as the proceeds.

    Now if you are talking about identity theft - that is an entirely different topic. And there is a vast amount of mental suffering and long term damage that it can cause individuals.
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  3. #3
    Join Date
    May 2004
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    Any official sources of credit card fraud (real fraud by 3rd parties) will be inaccurate and "puffed" to meet the needs of the firm or industry which is making those figures available.

    VISA (and it's affiliated banks) cannot take a stand and admit the true amount of fraud perpetrated by their own cardholders who lie and get chargebacks just to get products for free online. They "play down" those figures since it would be political suicide for them to expose their own cardholders as being a major source of the reported credit card fraud online.

    I'm doing my thesis and am interested on the mental and physical 'suffering' that clients endure after having their credit card details stolen online.
    You're living in a dream world if you believe real identity theft is a MAJOR portion of online fraud, it's the same scare tactics that were used during Y2K to sell related products/services. It's the same scare tactics used by many banks to sell disability insurance which pays MINIMUM CREDIT CARD PAYMENTS for 6 months if the cardholder gets disabled (as if paying the minimum payment for a few months is really going to provide any real relief to their family).

    Identity theft is a scare tactic used by certain industries to sell services/products which are not needed, and to further the agenda of certain industries who want the public to perceive things in that light. A large portion of real online fraud is committed by cardholders themselves, with only a small amount being committed by thieves who live in 3rd world countries and places in Europe with defunct economies.

    If you want to be accurate in your thesis then why not write an enlightening perspective which exposes the fact that a major source of credit card fraud is perpetrated by cardholders who lie to get things for free, since VISA gives all cardholders carte blanche to report chargebacks. Of course, that's a politically incorrect position, but the truth usually is.

    VISA and it's banks must take the position that lying cardholders are a SMALL minority of the chargebacks online, since any member bank who publicly stated otherwise would risk its own business relationship with VISA. Just think about that, how can you believe figures from an industry which has a financial incentive to tell you that cardholders are mostly all honest and do not take advantage of the unlimited chargeback policy available to them. Any figures they give you will say that cardholders are victims of fraud and should be pitied and protected, since that's the only answer which benefits them and serves their own needs.

    Credit card fraud perpetrated by real thieves who steal card numbers is only a fraction of the real chargebacks/fraud online.

  4. #4
    Join Date
    Mar 2004
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    316
    CRT2004, Thanks for long....comments. I learn something..

  5. #5
    CRT - I basically know that and that will be on another part of my thesis but right now I need data on the client side.. Its well known that its far too easy for clients to chargeback and most often than not its the merchants who really suffer and not the credit card companies (I've had some first-hand experience on that when I had started a hosting business in the early 1999 days - just imagine fraudsters used to test my payment interface to see if the stolen cards had credit and in those days there were not even CV2 or CVV numbers with the consequence that I was practically wiped out

    Till now I've found

    epaynews.com/statistics/fraud.html
    cifas.org.uk/faqs.asp

    Can anyone point me to some other resources please?

  6. #6
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    RE: The websites you suggested
    The first one is highly prejudicial, and it attempts a scare tactic (the old "Are you using our services, if not then you're unsecure" trick). The second one, I can't say as it exists, because it wasn't loadable when I tried.

    RE: your questions
    As both a consumer and a business owner, I think that the whole identity theft thing is well overplayed. In years of being online, I've never had my identity "stolen", nor have I had my cc fraudulently used.

    The only chargebacks, as a business owner I've seen haven't been from cards that were fraudulently used, they were from individuals who wanted something for nothing, part of the risk of having an online 'service'. Even through paypal you have to put up with these.

    Honestly, I think the person @ danger here is NOT the individual person, but the business that has to deal with the individual person who's been delivered service and suddenly decides to charge back 6 months of service (look @ all the clowns in the AN crap) because of one thing or another. Admittedly, SOMETIMES it's a good thing to do a chargeback (it IS after all a last resort), but people need to learn to deal with what they paid for and accept it. If they can't read the TOS/AUP of the company they choose to do business with, is that their fault, or the fault of the company who forced them to read it and acknowledge reading it before processing their order?


    Long and short:
    Businesses have FAR more to worry about than consumers. I agree, the statistics of false chargebacks are rising, and when those chargebacks occur, then the business is hit with hefty fines and fees, all because the user wants a free product.
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  7. #7
    Join Date
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    I agree 100% with you, Wolfstream.

    The real loss & damage on chargebacks is that incurred on the business & banking side of the equation - not the consumer side.

    However, here is an idea that might be interesting - is to investigate the impacts of consumers overspending on credit cards and incurring debt loads that they can't pay off.

    This is an increasingly major problem here in the U.S. and it might be somewhat pertinent to your thesis?
    CDGcommerce.com - Trusted Merchant Account Solutions since 1998
    Many thousands of successful, growing businesses benefit from our expertise every day. You can, too!
    We help merchants to eliminate gateway costs, reduce & mitigate fraud and achieve streamlined PCI compliance.
    Learn more today at http://www.cdgcommerce.com - we look forward to helping your business grow!

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