Con artists hit resellers

Anger grows as credit card giants leave security matters in resellers' hands

Resellers are growing increasingly angry at the lack of protection given to them against online credit card fraudsters.

With secure credit cards unlikely to be available until at least 2004, resellers are left liable for goods bought fraudulently over the internet, as credit card companies refuse to insure against what they term "customer non-present transactions".

Last week, the National Consumer Council claimed consumers are not protected enough in online shopping, and called on the Government to do more to regulate websites.

However, Glenn Morrison, sales and marketing director at memory and storage specialist Upgrade Options, claimed too much emphasis is being placed on the fact that consumers are at risk, but nothing was made of the fact that it was the reseller that pays the ultimate price.

"A secure method of ecommerce is fundamental, but the policy of card companies is to propagate the myth that the consumer must be aware at all times, when it is the reseller that suffers," Morrison said.

Sunil Madhani, financial controller at online reseller Action, agreed that online fraud is a huge problem.

"About a year ago we were losing one per cent of our monthly turnover to fraud, but that has been reduced significantly by putting some draconian security measures in place."

Action no longer ships to non-registered card addresses and doesn't accept credit cards from anywhere outside the UK, he said.

Tony Price, managing director at e-tailer WStore, said: "It's about time for some major changes. Card companies rely very highly on the reseller to put a system in place to ensure against credit card fraud, which isn't right.

"Why should resellers be made to suffer when someone can walk into a store and use a credit card fraudulently, but the retailer is still protected?"

Richard Tyson-Davies, representative of the Association for Payment Clearing Services, admitted online credit fraud is a major problem for the channel.

"Credit cards are not yet designed for the internet, they are meant for face-to-face transactions," he said.

"The problem is being worked on. Secure cards are being developed, but they won't be available until at least 2004."