Issuers Race to Match Crooks.(Cards)

Byline: Stephanie Bell

To keep transactions safe from online fraud, issuers and card companies are working not only on up-to-date fraud-prevention systems but also on reliable customer service to help people who have problems with their transactions.

Because crooks' knowledge of the latest fraud-prevention technology evolves so rapidly, many of the industry's customer-service offerings have a ways to go to keep ahead of e-commerce fraudsters, observers say.

Indeed, "a seismic shift" has occurred "in the sophistication of the fraud process in the last 10 years," said Matt Simester, director of Auriemma Consulting Group in the United Kingdom. Ten years ago, little was known about identity theft, which now seems to be the fastest-growing type of fraud, he said.

In the United States, about 11.7 million people 16 or older were victims of identity theft from 2006 to 2008, according to the most recent data from the Bureau of Justice Statistics. Of those, 6.2 million experienced unauthorized use of, or attempts to use, their credit card accounts - the most common type of identity theft, according to the bureau. About 4.4 million people reported that their debit card, checking account or savings account had been compromised.

More than 40% of the identity-theft victims said they spent a day or less resolving their financial and credit problems, but 27% spent more than a month clearing them up. And some consumers spent more than six months resolving issues associated with identity theft, according to the bureau.

When problems arise, many people turn to their issuer's customer service department and expect a timely resolution. Generally, when an e-commerce transaction results in fraud because of problems with an online merchant, "the consumer oftentimes wants the ability to speak with a live human being in an efficient manner and expects rapid action on chargebacks," said Julie Conroy McNelley, an analyst at Aite Group LLC in Boston.

Some consumers, however, do not have this good experience and often become frustrated when speaking with customer service representatives, she said. So companies should do more to train representatives, she said, and they should prepare scripts appropriate to the situations that arise.

Many issuers and even some card companies are working to make sure customer service offerings are up to date with prevalent types of e-commerce fraud.

Discover Financial Services, for example, divides its customer service center into units such as direct banking and payment services.

And though a strong customer service center is important, issuers could do even more to ensure their representatives are able to handle any type of call, including those about e-commerce fraud.

"The Internet has created a new playing field for criminals to try and obtain consumers' personal and financial information while consumers shop online," a Discover representative said.

Discover offers a secure online account-number service, also known as a single-use or virtual credit card number, as a free online-shopping option that uses a substitute number to prevent the account holder's actual number from being displayed online.

American Express Co. offers its cardholders digital and telephone customer service as well as added layers of security for each card account, an Amex representative said.

"Working with merchants is different from issuers that only deal with consumer information. We have the ability to look at both sides and prevent fraud before it happens," the representative said.

Many consumers believe they are safe just using a password and username, but often this information is "not going to cut it" because they may be so easily compromised, Aite's McNelley said.

From consumers' point of view, "security is expected, so they are going to notice when it's not there," McNelley said. But the security should not hinder the consumer, she said.