E-merchants offered fraud insurance - News - Business

To print: Select File and then Print from your browser's menu

--------------------------------------------------------------
This story was printed from ZDNet Australia.
--------------------------------------------------------------

E-merchants offered fraud insurance

November 26, 2001
URL: http://www.zdnet.com.au/news/business/soa/E-merchants-offered-fraud-insurance/0,139023166,120262040,00.htm

It's not just customers who are affected by fraud on the Internet - and now e-commerce merchants are able to insure themselves against credit card crime.

E-commerce payment specialist DataCash is offering online merchants an insurance policy to protect against fraudulent credit card transactions. The insurance policy highlights the growing awareness that it is not only consumers who need protection if online retail is to develop.

The ChargeBack Insurance policy is aimed at both small and large online retail outlets, but companies will need to have reasonable fraud prevention measures in place for the insurance to be valid.

Under the current 'cardholder not present' rule, online retailers are liable for any fraud conducted on their sites because there is no manual signature to confirm the sale. If the merchant ships goods and later finds the transaction was carried out using a stolen card, it has no automatic financial protection.

The insurance is being offered by Click For Cover in association with James Hampden Insurance Brokers. The cost is determined by the type of goods sold and the size of the company. Merchants also have to use Ebit Guard from Retail Decisions, a product that checks the likelihood of a transaction being fraudulent.

"Companies selling laptops will pay a higher premium than those selling trousers because those purchases are more likely to be fraudulent," said Gavin Breeze, business development director at DataCash.

Ebit Guard from Retail Decisions uses a neural logic algorithm to determine if a transaction is likely to be fraudulent. A risk score is sent to the merchant for each transaction. If that score is above an established threshold, the transaction can be refused or further verified before shipment.