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Merchants Protecting Consumers from Credit Card Fraud

In 2006 consumers used their credit or debit cards to spend approximately $160 billion at fast food restaurants alone. That’s a lot of transactions. Total online sales were projected to reach more than $250 Billion in 2007. Credit card fraud amounts to billions of dollars a year. But who is it that is really looking out for you? Who is it that is really being proactive about protecting consumers from fraudulent use of their credit cards before it happens? It’s not your bank.

Sure, you can contest a charge you didn’t make and there are laws in place to help protect you from being obligated to repay those charges. But that’s all after the fact. After your bank has already approved the transaction. If you think it’s your bank that pays for those charges you’d be wrong. It’s the merchants and ultimately you, the consumer, through higher prices, not your bank who issued the approval for the charge in the first place.

When you apply for a credit card, you provide the issuing bank with a wealth of information. Personal and private information that identifies you and ties you to your credit card. Information your bank has at its finger tips. When you make a purchase online, you provide merchants with personal and private information. The same information you provided your bank. How much of that information does your bank verify before they issue an approval for your online credit card purchase? Very little.

When you make a purchase online, your bank verifies the card number, expiration date, and security code. That’s it. That’s all they look at before issuing an approval for a purchase. That and your available credit. But what about your address or zip code, they have that on file, do they even transmit the information for the merchant? Nope, they don’t even consider it when issuing an approval. Why? Good question to ask your bank. Ask them why it is they don’t bother to verify information they have right at their finger tips before they issue an approval and feel free to post their answers here. They ought to be “interesting” to say the least.

So who is it that verifies this information after your bank has already approved the transaction? After the amount of your online purchase has already been held against your credit or debit account by your bank? It’s the merchant. Ever had an online purchase declined because an address or zip code didn’t match yet still see the amount being held against your credit or debit account? That’s because your bank approved the purchase but the merchant, in an effort to protect you, as well as themselves, declined the purchase. Ever had a merchant call you to verify a purchase or address? That’s because the merchant is trying to protect you and them from a potentially fraudulent purchase after your bank has already approved it.

I invite any of you to ask your bank why? Why they do not verify the information that you provide when making an online purchase before they approve that purchase. Why they make it incumbent upon the merchant to verify information, information that they themselves provide, instead of verifying it themselves before they issue an approval and hold your money. Why reputable merchants are doing more to protect you from the potential misuse of your credit card and decline transactions than they are.

Inquiring minds want to know.

Dave

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