Card cheats? Don't ask the banks

Major banks are shirking the task of tackling Internet credit card fraud, leaving e-tailers to carry the costs, according to OzBooks CEO Rafael Chavan de Montero.

The founder of one of Australia's largest online book shops, Chavan de Montero, is lobbying the banks to improve security checks with merchants in an attempt to cut online fraud.

Australian Federal Police estimate the total cost of fraud to be around $3.5 billion a year and credit card fraud is growing at a rate of 30 per cent per year.

Chavan de Montero believes it is the merchant and "victim card owner" that carry the burden of credit card fraud.

He is seeking greater connectivity between the banks and merchants to cross check credit card information to safeguard transactions.

"When approving a purchase banks should allow us to check information about the cardholder such as the address and other personal details they keep on their files; it is only through cross checking with the banks and credit card companies that the problem can be effectively addressed," he said.

"The banks freely authorise cards for payment and if there is a problem they debit the merchant; they also charge commissions on transactions whether they are fraudulent or not, so it is the merchant who always carries the burden."

However, National Australia Bank spokeswoman Majella Allen said this method would breach privacy protocols because banks cannot give out personal details about their customers.

"We are using other methods to detect credit card fraud including a software package introduced last year, which identifies transactions that are different to the customer's usual spending patterns," she said.

Since its introduction in June last year, Allen said Prism software has saved the National Australia bank $2 million. The fraud detection system identifies subtle patterns of fraudulent behaviour by comparing individual card and account usage with known patterns of fraud.

A suspicious transaction is flagged allowing the bank to block cards and save credit lines before they are lost.

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

More about Australian Federal PoliceFederal PoliceNational Australia BankOzBooksPrism

Show Comments