Online Fraud

Online credit card purchases are also susceptible to fraud, though it�s not considered skimming, according to Iacobuzio and Jeanne Capachin, senior analyst for Meridien Research, Newton, Mass. Online credit card losses are expected to grow from $2 billion last year to $3 billion in 2001, according to Meridien.

Much of the growth is due to the sheer increase in the number of online transactions, Capachin said.

Often merchants rush into e-commerce with the quickest-to-install, least expensive technology, without making sure that all of the proper security precautions are taken, leaving their databases open to, or only slightly concealed from hackers, Capachin added. In many of these cases, the hacker will contact the merchant to inform him about the security compromise and will demand money to not release credit card and other customer information.

Some e-commerce software programs do indeed carry many security features, but they need to be �turned on� in order to work. One quandary for the merchant is that the more security features of the program, the longer transactions will take. Speed is important in e-commerce, so delaying transactions can mean Web site abandonment by the consumer and lost sales for the merchant.

Visa and MasterCard and other credit card issuers are trying to crack down on such fraud by requiring that merchants take certain security precautions before accepting online credit card purchases, Capachin said.