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PIN cards shift card fraud onto mail order

Penny Williams

A CALL for credit card companies rather than retailers to pick up the bill for cardholder-not-present fraud has been made by the Federation of Small Businesses.

"Cardholder-not-present (CNP) crime is a particular concern to businesses, not just because it is on the increase, but also because in most cases the business owner rather than the credit card company is liable in the event of fraud," said FSB policy chairman John Walker.

The FSB is claimed to be Britain's biggest business organisation with 185,000 members.

The call follows news from the Association of Payment Clearing Services (Apacs) that UK card fraud losses reached 504-8 million [pounds sterling] last year--a jump of 20 per cent on 2003 (see Business, page 10).

Most observers put the rise in activity down to a thieves' last fling before the introduction of Chip and PIN protected cards.

However, the advent of Chip and PIN to counter most point-of-sale transactions has had an unfortunate knock-on effect.

Fraudsters have now moved on to cardholder-not-present and identity fraud--areas that Chip and PIN technology cannot protect.

Latest Apacs's figures show that fraud linked to cardholder-not-present transactions--where goods are bought over the phone, Internet or by mail order--had grown by 24 per cent to reach 150m [pounds sterling].

He pointed out that, although retailers are not held liable for some internet payments, it is the business and not the bank that pays if a mail-order or telephone transaction turns out to be fraudulent--even if it has been correctly authorised.

"We look forward to working with the industry to develop a solution where the issuing bank is liable in the event of fraud for all authorised transactions."

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