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.
