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Richard Fiddis of Exerian UK
"The typical fraudster....will do many transactions at low value"
 real 28k

Thursday, 14 September, 2000, 06:36 GMT 07:36 UK
Web fraud made easy
Nine out of ten online credit card frauds in the UK go unpunished, as many internet retailers do not bother to report cases and police rarely follow up complaints.

According to a survey by credit rating agency Experian, many online retailers fail to make basic checks on buyers, like examining whether the address of the credit card holder and the delivery address are the same.

The analysis suggest that nine in every ten internet fraudsters are getting away with it

Richard Fiddis, Experian UK
Fraud cases are likely to be detected only weeks after they have occurred, when card holders receive their account statement and query charges. In the meantime, criminals can have used the card dozens of times, often making multiple purchases at one website.

After talking to 800 companies trading on the internet, Experian found that only 57% of companies bothered to report fraud cases.

More than half of those found that the police were not interested in following up the matter, and only 9% of all fraud cases reported to police actually led to a prosecution.

Richard Fiddis, of Experian UK, said that "even when the crime is detected, the analysis suggests that nine in every 10 internet fraudsters are getting away with it".

Paying for the damage

Consumers have little to fear. Most credit card firms reimburse card holders for fraudulent transactions. Nevertheless, the economic impact can be dramatic.

A fifth of all online retailers experience fraud amounting to more than 1% of sales. Some firms find that up to 10% of their sales are made to fraudsters.

Companies offering online services or software for download are particularly vulnerable, as fraudsters have little difficulty covering their tracks.

But buying physical goods is no problem either. After hijacking somebody else's credit card details, fraudsters simply ask retailers to send goods to a drop-off address where they collect the items and disappear.

According to Experian, almost a half of all firms fail to use external data to verify that the shopper is actually the credit card holder, thus making easy pickings for criminals.

And as little as 15% of retailers used automated systems to make identity checks.

Mr Fiddis said: "In effect, the internet is becoming the first choice for thieves that, in another age, might have just been petty shoplifters or locker-room pick-pockets."

Identity theft

In the United States, such identity theft has been taken to an even more sophisticated level.

In what is now a huge criminal industry, every year about 500,000 people find that their identity has been abused.

Tips on how to wheedle out a person's financial identity are traded openly on the internet, and the web is making it easier for criminals to burrow for such data.

Victims can find their credit status ruined, after criminals used their identity to open bank accounts and take out loans.

And as many firms do not make thorough checks before handing over goods or money, some victims find that even fraud alerts by firms like Experian and TransUnion do little to prevent abuse.

During an investigation by the US House of Representatives' Banking Committee, Representative Jim Leach warned that "Americans' financial privacy - indeed their very financial identities - are at risk as never before".

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