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Wednesday, October 29, 2008

Identity theft: a crime on the rise

Outsourced Call Centers Are Costing Millions In Identity Theft.
Outsourced call centers can save money on the side of US employment.
The quality of service is, of course, not as good as it should be, but this is not the point.
The problem is the security issue.
So the question is: is it worth to save?

But I have another question.
May be, "Is the fraud a sale?"
Yes, public opinion and credit card companies can and will force companies that process credit card data to increase their security. However, how about the "acceptable risk" concept that underlies the very security procedures of credit card companies themselves and pervades their relationships with their parties? Do As I Say, Not As I Do?

The dirty little secret of the credit card industry is that they are very happy with 10% of credit card fraud, over the Internet or not.

In fact, if they would reduce fraud to _zero_ today, their revenue would decrease as well as their profits. So, there is really no incentive to reduce fraud. On the contrary, keeping the status quo is just fine.

This is so because of insurance -- up to a certain level, which is well within the operational boundaries of course, a fraudulent transaction does not go unpaid through VISA, American Express or Mastercard servers. The transaction is fully paid, with its insurance cost paid by the merchant and, ultimately, by the customer.

"Acceptable risk" has been for a long time an euphemism for that business model that shifts the burden of fraud to the customer.
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