Feeds

FSB calls for e-fraud ‘liability shift’

SMEs getting stung, switching off

  • alert
  • submit to reddit

Top three mobile application threats

The huge rise in Internet fraud is threatening the success of e-commerce, The Federation of Small Business (FSB) warned today.

In a letter to E-commerce Minister Stephen Timms, the FSB explained credit card fraud over the Internet or telephone was of particular concern to small firms because the retailer, rather than the issuing bank, is liable.

According to the FSB, Internet fraud costs the British economy £28 million a year, compared with £3.8 million in 2000; it is now acting as a disincentive to trading online.

The FSB cited the example of computer parts retailer Cybercomp, whose director, David Barrett, was forced to shut his website after getting stung for a £2,500 charge-back.

Barrett believed he was protected after getting authorisation for the transaction from the bank which issued the card - FSB policy chairman John Walker said businesses were confused over exactly what authorisation meant.

"When a transaction takes place over the internet, credit card authorisation is not a payment guarantee, it only indicates the card has not been reported lost or stolen and there are sufficient funds available in the cardholders account," he said.

The FSB expresses fears that cardholder-not-resent fraud will grow as banks focused on tackling cardholder-present fraud with the new chip and PIN system.

The organisation welcomed the new transaction procedure, and all retailers who used the FSB for their merchant service already had Chip and PIN compatible terminals but Walker warned there is a danger that as the new system took off, fraudsters will just use the Internet instead.

"For the small business community to fully embrace e-commerce, we need to work towards a liability shift so that the issuing bank is liable in the event of cardholder-not-present fraud in the same way as the card issuer is liable in the event of cardholder-present fraud," he added.

© Startups.co.uk is the biggest independent small business site in the UK. It has more than 2500 articles covering everything from taking on staff to dealing with VAT.

Related stories

Chip and PIN: not enough to beat card fraud
Small.biz needs help with Chip and PIN
Joe Public blames banks for credit card fraud
Schoolgirl turns tables on email credit card fraudster
E-fraud costs retailers millions

Top three mobile application threats

More from The Register

next story
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Did a date calculation bug just cost hard-up Co-op Bank £110m?
And just when Brit banking org needs £400m to stay afloat
Sorry London, Europe's top tech city is Munich
New 'Atlas of ICT Activity' finds innovation isn't happening at Silicon Roundabout
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
prev story

Whitepapers

Designing a defence for mobile apps
In this whitepaper learn the various considerations for defending mobile applications; from the mobile application architecture itself to the myriad testing technologies needed to properly assess mobile applications risk.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.