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Fraud

"It sounds like a dream for criminals and a nightmare for consumers. According to the NCIS (National Criminal Intelligence Service) a small number of thieves have hacked into the databases of retailers and stolen tens of thousands of credit card details.

Police merely have to say the words 'Internet credit card fraud' for it to appear to be a significant problem. The reality is more mundane: counterfeit cards, not the Net, are responsible for the majority of cases of credit card fraud.

While 292.6 million was lost to fraud last year, only 7 million of this (under 2.5%) was from the illegal sales when the customer and card were not physically present at the point of sale. This amount, which includes all sales conducted by both telephone and the Internet, is tiny compared to the millions of people who made transactions worth billions of pounds on the Net last year.

Most importantly for consumers, there's no financial risk from shopping on on-line with their credit cards. If a cardholder's details are compromised in a "card not present" fraud the cardholder doesn't have to pay a penny.

In the unlikely event that a consumer finds an unauthorised transaction on their credit card statement, they will complain to their card issuer, who will then charge back the merchant. Therefore the real risk belongs to merchants, which can find themselves stuck with the tab, with no one to turn to for help. Merchants bear the brunt of the responsibility for fraudulent credit card transactions online.

On-line credit card fraud is more cyber-paranoia than cyber-fraud and has just as much to do with inadequately secured passwords and conventional burglaries as it does hacking.

Whether cyber crime is widespread or not, nobody would want their card details handed over to criminals, just as they wouldn't want them to have the keys to their home. We all take reasonable care of our house keys, so too should we look after our credit card details.

Security is a compromise between ease of use and safety. A cylinder lock has a limited number of permutations and is susceptible to an attack of brute force _ just as credit card details are.

The convenience and relative cheapness of front door locks and using credit cards outweighs the alternatives. Using credit cards to purchase is easy, convenient and popular. That's why consumers keep on using their cards _ they rarely experience fraud and if they do, banks offer a high degree of protection. After all, banks need some justification for their high charges.

The irony is that using a credit card may be even safer online than off. Typing in a card number is certainly safer than speaking it into a mobile phone or handing it over to a badly paid waiter. It's time to discredit the myths about online card fraud and get on with our Internet shopping."


Extracted and Edited from PC Pro - Nov 2001
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