The scam is not a new one, but according to fraud protection
company Early Warning, which detected the massive rise over the
past month, it is hard to beat because the cheats are valid credit
card holders and the personal details submitted are correct.
When the credit card company’s statement arrives after the goods
have been delivered, the cardholder denies any involvement. Card
protection results in the value of the order being charged back to
the merchant.
Managing Director Andrew Goodwill suggests two reasons for the
rise of this fraud: firstly, the run up to Christmas; and secondly,
the credit card companies' recent promotion of card fraud
guarantees, making consumers increasingly aware that they won't
lose money to fraudsters.
Early Warning addresses the issue by offering a live database of
fraudsters’ details. Instances of Customer Denial Fraud are
circulated to members as they are reported, so online merchants
know which cards to avoid. Cross-referencing is possible by email
address, IP address, delivery postcode and name.
Managing Director Andrew Goodwill said, “Customer Denial Fraud
is one of the simplest and therefore potentially most costly
deceptions for Internet transactions. The way CardAware takes it on
is equally simple and effective for the online merchant.”
He told OUT-LAW that if someone is a genuine victim of card
fraud it is very unlikely that the person will appear in the
database; but a customer whose order is rejected can always ask why
and checks will be made to spot any erroneous entry. In three years
of operation, Goodwill says there has never been such a
mistake.
Verified by Visa and MasterCard SecureCode are other systems
that seek to improve the security of online payments. They offer
participating merchants a liability shift, so that card issuers
become liable for online fraud, instead of merchants.
