Friday, April 29, 2016

Why is there so much credit card fraud, part 2

Stores can't upgrade to newer, safer equipment because it hasn't been certified.  The banks own the certification companies, and there's no incentive to hurry certification because the stores are (since October 2015) 100% liable for all fraud.
Avi Kaner, a co-owner of the Morton Williams supermarket chain in New York, has spent about $700,000 to update the payment terminals at his stores.
Trouble is, he cannot turn them on.
The new terminals can accept credit and debit cards with embedded digital chips, a security feature intended to reduce the number of fraudulent purchases.
But before the payment systems can work, they must be certified, a process that Mr. Kaner and many retailers around the country are waiting to happen. In the case of Morton Williams, the holdup has lasted several months.
The cost of waiting, retailers say, is piling up.
And so the stores are suing:
Payment processors “don’t have any incentive to hurry the certification along,” said Patrick J. Coughlin, a lawyer for retailers in a recent lawsuit that accuses the major card networks of deliberately creating impossible requirements for merchants. “They’re not the ones paying the fraud charges.”
The whole thing is a mess.


Old NFO said...

As and soon as they ARE certified, bank fees will go up again... sigh

R.K. Brumbelow said...

Online retailers can really be taken to the cleaners also. For example, we sold a scope online, delivered it to the address on file with the credit card company, then had the cc owner claim it was fraud. Was it fraud? Turns out it was, the cc owner got their identity stolen, the perp opened up an address at a reshaping location and we lost 800 bucks in inventory.