Online retailers have called on the UK government for protection from credit card fraud, in response to plans to introduce a seal of approval to protect consumers from rogue traders.
Stuart Chamberlain, development director of online mall Countdown Arcade said that while he believes consumer protection is important, the government must also move to protect the vendor against consumer credit card fraud.
The government's seal of approval, called 'e-hallmark,' was announced yesterday and will be the third such scheme launched this summer. The Consumers' Association's launched Which? Web Trader in June, followed the industry backed Clicksure.
"The e-hallmark is a good idea as reputable traders should have nothing to hide. Internet fraud has yet to become a significant problem in the UK but it is already quite advanced in the US, so now is a good time to act and nip it in the bud before it becomes a real problem," said Chaimberlain.
"The next step after introducing measures to protect the consumer against rogue traders should be legislation to protect the vendor against consumer credit card fraud," he said.
Countdown Arcade has 150,000 merchants worldwide and wants to offer a gift service where goods can be delivered to an address other than the card holders. But because this system is open to abuse by credit card thieves, banks will only offer transaction guarantees for goods delivered to the invoice address, leaving the merchant to pay for any fraudulent purchases.
This is discouraging merchants from offering this service, said Chamberlain. "An overwhelming majority of our merchants are scared to deliver to an address other than the one on the invoice and tell us so as soon as they join," he said.
Some merchants such as Amazon offer a gift service, letting users chose where gifts are delivered, regardless of the fraud risk. Chamberlain used to work for Amazon.co.uk and said that in one case, £500 worth of books bought on a stolen credit card was sent to Albania before the alarm was raised.
Consumer credit card fraud over the Internet is a serious problem as the user can escape identification. Recent research by Visa found that while Internet related sales only account for one per cent of its £463 billion annual European Union turnover, they also account for a staggering 47 per cent of disputes. (see Newswire 12 April)
The SET (Secure Electronic Transaction) protocol solves some of the problems by authenticating both parties in a transaction, but has yet to be implemented by a significant number of merchants.
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