By Melody Lashmar - Issue 3: Online purchasing is targeted by fraudsters with computer programs to find and use card numbers.
You might question how computers generating transactions can be considered consumer initiated fraud but from the merchants and the payment flow's perspectives this entry into the payment stream was done by a "consumer".
This transaction generation by computer programs is a real problem for everyone who owns a business, a payment account (like a credit card or checking account), and the banks themselves. There is a lot of private enterprise in the marketplace creating great technology to address this issue and help merchants discover that a consumer is potentially fraudulent but as the systems get smarter so do the fraudsters and it is their business to crack the code to continue making money. As a result, this has to be a joint effort with the banks as it is only the banks that actually know if the account number is valid, if the name (or other data) on the transaction matches the account owner and if there are funds in the account. This ideological suggestion of everyone working together will never happen as there is no incentive for most of the players to participate so the only realistic action is to have a different standard set for chargeback and unauthorized transactions on ecommerce merchants as described in an earlier post .