OTTAWA — Cyber crooks are pushing credit card fraud to record highs and costing Canadian businesses hundreds of millions of dollars annually.
According to statistics released by the Canadian Bankers Association, credit card fraud hit $436.6 million in 2011, the latest year for which statistics are available. Of that, “card-not-present” fraud, where a crook uses a stolen card number to make purchases over the Internet or by phone, was the biggest and fastest growing type of credit card fraud in Ca...
According to statistics released by the Canadian Bankers Association, credit card fraud hit $436.6 million in 2011, the latest year for which statistics are available. Of that, “card-not-present” fraud, where a crook uses a stolen card number to make purchases over the Internet or by phone, was the biggest and fastest growing type of credit card fraud in Ca...
OTTAWA — Cyber crooks are pushing credit card fraud to record highs and costing Canadian businesses hundreds of millions of dollars annually.
According to statistics released by the Canadian Bankers Association, credit card fraud hit $436.6 million in 2011, the latest year for which statistics are available. Of that, “card-not-present” fraud, where a crook uses a stolen card number to make purchases over the Internet or by phone, was the biggest and fastest growing type of credit card fraud in Canada.
While many Canadians are under the assumption that the banks deal with those losses through elaborate insurance policies, that’s not the case. The merchant selling the goods is the one liable for fraudulent card purchases.
“That surprises a lot of first-time sellers,” said Louis Kearns, director of payments at Internet retailing specialist Shopify Inc. “For first-time merchants, who are working with limited cash flow to begin with, this can put a big dent in their operations. The onus is definitely on the merchants.”
Ottawa-based Shopify works with more than 30,000 retailers, many of which are small businesses run from a person’s home, to sell goods online. Kearns said being held responsible for a fraudulent purchase is something many didn’t even consider when they began selling goods online. The oversight can be costly.
A consumer makes a card-not-present purchase when buying online from a website or from a vendor over the phone. In those cases the card holder is “not present” to provide additional identification to verify his or her identity, such as a driver’s licence. Card-not-present fraud accounted for $259.5 million in losses in 2011, up from $176 million in 2010.
It’s expected to get much worse.
“If there is any fraud, the responsibility is (with) the merchants. It’s a challenge for the industry. It is a growing problem,” said David Wilkes, senior vice-president of the grocery division at the Retail Council of Canada, which has been a vocal critic of the credit card industry and the fees it charges to merchants. “You would assume with respect to the fees and the charges assessed to merchants for the credit card purchases, those costs would be included in those fees.”
Sales from online stores in Canada were up 25 per cent in the first six months of 2012, according to MasterCard. Globally, online retailers were expected to net a record $21.45 billion U.S. in 2012, according to eMarketer Digital Intelligence. The booming market for online shopping, coupled with tougher chip and PIN security on physical credit cards, is luring more crooks toward online credit card fraud.
With interest in using stolen credit cards to make fraudulent purchases soaring, criminals are responding by opening online stores that sell credit card information and rival Amazon.com in their complexity.
Jerome Segura, a senior security researcher from Victoria, B.C., at Internet security firm Malwarebytes, said using credit card numbers to make fraudulent online purchases has become mainstream. Numerous websites are selling credit card information that has been stolen from millions of people around the world. The sites are so elaborate that would-be buyers can narrow down cards based on their billing address. Doing so allows a crook to pick a card in his own country, even his own city, so he can lower the credit card company’s suspicions about fraudulent purchases.
More info at http://www.ottawacitizen.com/business/Credit+card+fraud+numbers+soaring+record+rate+Canada/7777642/story.html
According to statistics released by the Canadian Bankers Association, credit card fraud hit $436.6 million in 2011, the latest year for which statistics are available. Of that, “card-not-present” fraud, where a crook uses a stolen card number to make purchases over the Internet or by phone, was the biggest and fastest growing type of credit card fraud in Canada.
While many Canadians are under the assumption that the banks deal with those losses through elaborate insurance policies, that’s not the case. The merchant selling the goods is the one liable for fraudulent card purchases.
“That surprises a lot of first-time sellers,” said Louis Kearns, director of payments at Internet retailing specialist Shopify Inc. “For first-time merchants, who are working with limited cash flow to begin with, this can put a big dent in their operations. The onus is definitely on the merchants.”
Ottawa-based Shopify works with more than 30,000 retailers, many of which are small businesses run from a person’s home, to sell goods online. Kearns said being held responsible for a fraudulent purchase is something many didn’t even consider when they began selling goods online. The oversight can be costly.
A consumer makes a card-not-present purchase when buying online from a website or from a vendor over the phone. In those cases the card holder is “not present” to provide additional identification to verify his or her identity, such as a driver’s licence. Card-not-present fraud accounted for $259.5 million in losses in 2011, up from $176 million in 2010.
It’s expected to get much worse.
“If there is any fraud, the responsibility is (with) the merchants. It’s a challenge for the industry. It is a growing problem,” said David Wilkes, senior vice-president of the grocery division at the Retail Council of Canada, which has been a vocal critic of the credit card industry and the fees it charges to merchants. “You would assume with respect to the fees and the charges assessed to merchants for the credit card purchases, those costs would be included in those fees.”
Sales from online stores in Canada were up 25 per cent in the first six months of 2012, according to MasterCard. Globally, online retailers were expected to net a record $21.45 billion U.S. in 2012, according to eMarketer Digital Intelligence. The booming market for online shopping, coupled with tougher chip and PIN security on physical credit cards, is luring more crooks toward online credit card fraud.
With interest in using stolen credit cards to make fraudulent purchases soaring, criminals are responding by opening online stores that sell credit card information and rival Amazon.com in their complexity.
Jerome Segura, a senior security researcher from Victoria, B.C., at Internet security firm Malwarebytes, said using credit card numbers to make fraudulent online purchases has become mainstream. Numerous websites are selling credit card information that has been stolen from millions of people around the world. The sites are so elaborate that would-be buyers can narrow down cards based on their billing address. Doing so allows a crook to pick a card in his own country, even his own city, so he can lower the credit card company’s suspicions about fraudulent purchases.
More info at http://www.ottawacitizen.com/business/Credit+card+fraud+numbers+soaring+record+rate+Canada/7777642/story.html
Read more http://baypaynewsfraud.blogspot.com/2013/01/credit-card-fraud-numbers-soaring-at.html