e-commerce credit card fraud

 

The Internet has expanded markets, but criminals have used technology to engage in e-commerce credit card fraud. In 2006, there were $500 million in chargeback fees worldwide. While the United States limits customer liability to $50 - when notifiying the bank of a lost card - the merchant usually bears a large portion of the financial loss.

The e-commerce credit card fraud crime is a "fraudulent transaction" when the merchant is unaware that the transaction won't be paid for by the customer. Thieves steal either the credit card or the personal data. Sometimes, store clerks copy sales receipts. Other scams include "phishing" "skimming" or "shoulder surfing".

Basic fraud detection targets the limited amount of personal customer data held by thieves. Some merchants request the Credit Verification Value (CVV2) number: a three- or four- digit value printed on the card. Knowledge of this number usually means the holder has the physical card in possession.

Many "payment gateway services" have screening procedures preceding credit card transactions. Secure Sockets Layer (SSL) 128-bit encryption technology enhances security. The merchant can also manually check transactions. The Address Verification System (AVS) compares billing and bank details.

A Fraud Scoring System (FSS) calculates the likelihood of fraud based on suspicious cardholder behaviors, analysis of common schemes and comparison to global transaction data. Firewalls are another popular security option.

Confirmation of the Internet Protocol (IP) address and requesting a phone number are also good options. Finally, the merchant can call the issuing bank in order to prevent e-commerce credit card fraud.