Retailer touts united front on online fraud

Catching fraudsters is a tough job in online retail, but each company's management and IT staff usually has to fight the battle on their own. Now Noel Leeming is aiming to interest other large retailers in swapping details of possibly fraudulent customers.

Catching fraudsters is a tough job for anyone in online retail, but each company's management and IT staff usually has to fight the battle on their own.

Now Noel Leeming’s internet manager Linda Geary is aiming to interest other large retailers in swapping details of possibly fraudulent customers.

Response from her initial targets for discussion, however, is mixed.

The current aim is simply to discuss what options might be open to stores’ online management to co-operate, she says. If credit card fraudsters behave online anything like the way they do at bricks-and-mortar stores, they will try one e-tailer after another with the same card; so if the first one approached could send out a warning then the others may avoid an expensive loss.

There is a counterbalancing danger of false accusation, she acknowledges, “but we don’t know how that will affect this proposal until we discuss it. We will have to weigh up that risk against the risk of loss."

A neutral body, such as the E-marketing Council, would probably be most appropriate to run the central register of fraudsters, she says.

She told Computerworld that the first two retail IT or e-commerce managers she would approach would be Richard Harrison of Woolworths and Mike Denvir of Liquor King.

Harrison is amenable to the proposal, but stresses that fraud would have to be proven before the perpetrator’s details could be forwarded to another retailer.

“If a proper process were set up, the risk [of falsely dobbing in an honest customer] would be non-existent."

If the police say a card is stolen, and someone is trying to make a large purchase and the bank or card company establishes that there is not enough money or credit in the account to cover it, then it would be an open and shut case of fraud, he says.

Woolworths has helped another retailer successfully deal with fraud on at least one occasion, but this was through lending the services of its expert team to track down the fraudsters and provide evidence of their guilt.

“We understand our obligations to safeguard customer privacy,” he says.

Fraud at Woolworths tends to go in “waves”, Harrison says. “We’ll get a spate of it, and then it’ll tail off. That possibly means the same fraudsters have moved on to another retailer”, so information exchange may be very useful in pre-empting that pattern.

Liquor King's Denvir sounds less keen.

"We’ve got a pretty strong privacy policy,” he says. “We would be uncomfortable discussing details of our customers.”

Liquor King does not suffer markedly from online fraud, he says. “There have only been three instances in the past few months.”

The company holds off delivery on large transactions for 24 hours, allowing payment to be approved, and a personal phonecall is invariably part of the process of a sale.

“I like the idea of [retailers] getting together on the subject,” he says, but exchange of customer information has to be approached with great care.

A case of unjustified blacklisting of a credit card number by a group of US websites was reported to Computerworld last year (US e-shops tough on 'fraudsters'). The victim insisted he had not done anything that might be interpreted as fraud. A website proprietor confirmed that his transactions were being rejected by a central credit-card validation agency “that everyone on the internet uses”, but declined to give any contact information for this body.

After insisting that the merchants make checks, the blacklisted individual had his name removed from the list. The process took more than a month.

“I’ve been caught once by something similar,” Denvir says.

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