Consumer worries about credit card fozia shan siddiqi have resulted in numerous protections being created. A consumer whose credit card is wrongly used by another generally has one hundred percent protection. If your personal credit card is stolen and used by an unauthorized party, the card issuer is usually able to refund all lost monies and will have your account corrected within days if not hours.
This consumer protection is wonderful. After all, none of us want to suffer the damages of identity theft or credit card fraud. The idea of a thieving stranger creating thousands of dollars of additional debt for us or cleaning out our bank account on lark is a frightening one. As consumers, we all want and need protection from this kind of criminal activity.
The other side of the consumer protection coin however, is not quite as shiny for those involved with the other end of the transaction. All deals involve two parties: a buyer and a seller. Unfortunately, it seems, every gain made by one party produces a loss for the other. It appears to be a zero-sum game, and merchants who process credit card orders are learning that the consumer protections they love when a bank card is misplaced can be a horrible burden on the other side of the proverbial cash register. As consumer safety and care is maximized, merchants lose out.
Consider a fraudulent credit card transaction. A consumer has her credit card stolen and it is used to place an online order for a product. The merchant processes the card, ships the product and believes the matter is complete. Only later does the merchant find out that the transaction was invalid and a byproduct of fraud. What happens to everyone involved?
The consumer loses nothing. After noticing and pointing out the problem, she is refunded for the fraudulent act. There may some inconvenience and fright involved when one realizes they were victimized, but the card issuer will make sure the consumer does not suffer a financial loss from the act of fraud.
What happens to the credit card company? Well, the issuing bank is certainly not willing to calmly accept a financial loss in every case of credit card fraud. They refund the money to the customer, but they plan to get that money back. Do they accomplish this via some form of fraud insurance or a governmental program designed to protect them from criminal activity? No. Instead, they reclaim the money from the merchant.
The merchant receives a retrieval notice during the investigation of the fraud and, if the claim of malfeasance holds water, will then be issued a chargeback for the amount of the illegal charge. The merchant account provider will take the money once received. To make matters worse, the merchant will probably be charged an additional fee for the administration of the chargeback. In situations where a merchant has been victimized repeatedly, his ability to maintain a merchant account may be put into jeopardy. Of course, the previously shipped product is usually unrecoverable, too.
The merchant is the last person in line for any fraud remedy. If the buck stops anywhere, it stops with the person who made the sale. As such, it is essential that merchants take steps to protect themselves from credit card fraud. The steps that must be taken are generally a matter of self-help, too. There is no organized effort afoot to better protect merchants. Instead, the emphasis is consistently placed upon protecting consumer interests.
We will be considering this problem primarily from the perspective of a merchant who does the predominance of his or her business online or via telephone. Those who transact business in traditional environments have opportunities to obtain signatures and to check identification that are usually not available to their more “virtual” counterparts.
The first is use of AVS technology. AVS (Address Verification Service) refers to the technology that allows merchants to input information regarding the credit card’s billing address that can be obtained from the buyer. When the card is processed for a sale, the merchant is informed whether or not the information matches that which is on file with the credit card company. Disparities indicate that possible wrongdoing may be afoot. This gives merchants a chance to intervene prior to deciding to accept or deny a questionable order and can reduce the instances of fraudulent transactions.
