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Need Help: Mehods to Curb Credit Card Fraud

March 2, 2006 11 comments
Dear Friends,
 
I am currently working on a file about credit card fraud cases.
 
There is this guy operating an e- commence website which allows credit card transactions. All credit card transactions are processed by a payment gateway company (‘the Company") who supposed to verify the authenticity of the cards. According to the Mechant Account Agreement btw the Company and the e- commerce guy, the verification process only covers checking on whether the cards have been reported stolen and whether the cards have sufficient fund for the transaction.
 
Now, a number of the transactions which passed the first test turned out to be fraud cases. The cards involved are fine, except that the cardholders later report unauthorised purchase, which in turn resulted in chargeback*.
 
Our e- commerce guy is double jeopardised: goods are sold and delivered, and now he has to bear the chargeback.
 
How do those big e- commerce players solve this problem?
 
Glossary:
Chargeback- A payment dispute initiated by the cardholder with their credit card issuing bank. The amount of the disputed transaction is immediately withdrawn from the merchant’s bank account, and the merchant can dispute the chargeback with proof of purchase, signature, proof of delivery, etc. A chargeback fee is usually assessed to the merchant on top of the actual transaction.  
 
 
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