LYCOS RETRIEVER 
Credit Card Fraud: Merchants
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A lot of articles have appeared in the media about credit card fraud but more often than not, it's from the Card holder's point of view. They see themselves as the victims and, to the extent of an aggravation factor, they are. What you don't usually read about is the merchant's side of the fraud story. Don't kid yourself. Card holders are NOT victims - merchants are.
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Skimming is the theft of credit card information used in an otherwise legitimate transaction. It is typically an "inside job" by a dishonest employee of a legitimate merchant, and can be as simple as photocopying of receipts. Common scenarios for skimming are restaurants or bars where the skimmer has possession of the victim's credit card out of their immediate view. The skimmer will typically use a small keypad to unobtrusively transcribe the 3 or 4 digit Card Security Code which is not present on the magnetic strip. Many instances of skimming have been reported where the perpetrator has put a device over the card slot of a public cash machine (Automated teller machine), which reads the magnetic strip as the user unknowingly passes their card through it. These devices are often used in conjunction with a pinhole camera to read the user's PIN at the same time.[2]
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Cory Siddens, senior risk product manager for CyberSource Corp. of Mountain View, Calif., says the fraud-scoring model used by his firm is similar to the one employed by credit card companies. CyberSource's similar risk management services for merchants use models that perform up to 200 tests on a transaction to determine the risk and likelihood that a particular transaction is fraudulent. The tests compare to results of transactions that have proven to be fraudulent in the past and the models return a score from 0 to 99 to allow retailers to make an informed decision on whether to accept or decline the charge.
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If you receive a credit card order from Singapore, check its legitimacy before you ship. The U.S. Commercial Service, American Embassy Singapore, has received multiple complaints from U.S. merchants reporting fraudulent credit card transactions committed by companies/individuals purporting to be in Singapore. The initial investigation of the fraudulent transactions has revealed that the shipments are actually being sent to freight forwarders in Singapore and diverted to unknown consignees in neighboring countries.
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Due to the size of most losses, the federal agencies (FBI and Secret Service) tasked with investigating credit card fraud are unable to do anything. Regardless of the crime, they generally don't have the manpower to go after anything less than $100,000. Local law enforcement agencies generally don't understand the problem and therefore are reluctant to get involved. Additionally, since the merchant generally is the loser, not the cardholder (the merchant takes the loss 99+ percent of the time) there is frequently a jurisdictional issue.
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Accepting credit card orders over the Internet allows merchants to automate Internet sales and reduce costs. An essential key to success is for merchants to manage the real threat of fraudulent Internet credit card transactions. The growth in Internet sales is following a steep curve - now merchants must begin to build the infrastructure needed to reduce fraud.
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