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Scam alert.

Byline: Alan Plews

A Teesside e-retailer is calling for more protection from banks after losing thousands in a new scam which is hitting merchants with a double whammy.

Darren Gowland claims his business, which sells hip hop jewellery and clothing, lost pounds 10,000 last year and said: "The big banks are not protecting us.

"Some of the public are showing how easy it is to rip us off. They order the goods by credit card, receive the goods, sign a squiggle on the delivery note and then a short while later contact their bank to say they have not received the goods.

"When checks are made for proof of delivery there are still denials - either about delivery or the so-called signature on the delivery note. The banks not only refund the money to the fraudster, they also issue us with a charge for the cash and we end up losing both the money and goods.

"We use the police to recover monies wherever possible but it's an ever-increasing problem and the police don't seem to have much power."

A Cleveland police spokesman said such incidents usually amounted to a civil dispute rather than a recordable crime.

He said: "There are a number of points in the process where goods could become 'lost' and it would be one word against the other. Once we receive specific allegations, they would be treated as any other crime."

But now a system similar to Chip and PIN is being introduced for online purchases, in an effort to halt this new wave of fraud hitting internet sellers.

An Evening Gazette probe found that two credit card firms and WorldPay - an online merchants' bank - are making progress on the situation.

Paul Stoddart, head of product and marketing at WorldPay, said: "Just as Chip and PIN has become a key weapon against card fraud in the high street, schemes such as Verified, by Visa, and MasterCard's SecureCode, both of which online retailers can obtain through WorldPay, are steadily bringing similar protection to the internet shopping environment."

Once an e-retailer has joined either scheme, shoppers enrol their cards with the website.

They are asked to choose a PIN number or password, which will be used for validation of any future transaction on that site.

An industry spokesman said the more retailers who use the scheme, the more it will become the norm, much as Chip and PIN is at high street stores.

"Fewer websites will eventually accept cards that don't have this authentication on them, which means the web will become a safer place to shop for both customer and retailer," he said.

"The card can only be used with authentication, which means the merchant can be certain it is being used by its rightful owner."

Anti-fraud measures already exist, but ultimately the strongest form of authentication is associated with PIN or a password, he added.

There are moves towards authentication of cards, so shoppers could not turn round and deny having bought goods.

If successful, the system will eventually become as normal as at the high street till.

A spokeswoman for the UK Chip and PIN company said a system is being trialled for making transactions such as mail order, phone and web purchases, based on that already in use.

"There are other methods currently in use and this is taking those methods to a higher level," added the spokeswoman.

This involves a machine - intended to be given to card holder by banks - which is credit card size and will generate a unique passcode each time the user logs on. The passcode, synchronised with the bank's own systems, is displayed on a small screen after the user enters a secret four-digit number.

This means that even if a card was stolen it could not be used by the thief.
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Copyright 2005 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Business Weekly
Publication:Evening Gazette (Middlesbrough, England)
Date:Sep 13, 2005
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