on hold with amex fraud services

[loinburger]

Never The restaurant that served loinburger was in Illinois, and I've been in Ohio for the past ten years

[Jon Miller]

I made twenty pounds of spaghetti last Saturday, and so dinner this week this spaghetti. Last week I made twenty pounds of pork loin and potatoes. I usually have a ribeye sometime during the weekend. I'm not particularly frugal, I just live alone and don't like eating in restaurants by myself.

I actually feel similarly, but my group went out to a lunch restaurant and I generally worked until midnightish (and so would have something microwaveable in the evening, often soy + frozen veggies or falafels + frozen veggies but occasionally dinner from supermarket or even pasta at home).

JM

[giblets]

He's balling. Conspicuous consumption (he's posting about it on the internet, complete with receipts for freaking sakes!). And getting his credit card numbers stolen.

What, do you never talk to other people about restaurants or anything like that? Why do you even live in a ****ing city if you're not into that sort of thing? Is this why you react to any attempt on Oerdin's part to discuss interesting foods with scorn?

Also, I didn't know that "balling" meant "having a credit card and actually using it". Thanks

[Dauphin]

The credit card companies bear the vast majority of the costs of fraud,

You sure it's not the merchants, who then pass it on to customers....?

I thought that credit card companies typically charge back to the merchant (or offer other fraud prevention services paid for by merchants so that they can avoid charge backs)

[KrazyHorse]

As I understand it, a physical swipe and signature are enough to protect the merchant.

[KrazyHorse]

Online transactions are probably more risky for the merchant, of course.

[KrazyHorse]

Again, coasian equivalence says this doesn't matter...

[Dauphin]

http://www.lexisnexis.com/risk/newsevents/press-release.aspx?id=1258571377346174

New York, NY – U.S. merchants are incurring $191 billion in fraud losses each year, according to a new report released today by LexisNexis® Risk Solutions. Among the findings, the 2009 LexisNexis® True Cost of Fraud Benchmark Study discovered that merchants must absorb nearly 10 times the identity fraud cost incurred by financial institutions. Retail merchants experience a massive $100 billion in losses solely attributed to identity fraud, which escalates to $191 billion when factoring in the additional cost of lost and stolen merchandise. The study also found that merchant fraud losses amounted to more than 20 times the total value of consumer fraud victim losses which totaled approximately $4.8 billion in 2008.

[Dauphin]

Again, coasian equivalence says this doesn't matter...

OK. I'm not read up on that so don't understand your point at present, but I was merely commenting on your factual assertion that financial institutions bear the burden.

[KrazyHorse]

Wiki "card not present transaction". It says that for such transactions merchants are liable, whereas for card present the issuing bank is liable. Also, I doubt the numbers you provided. They are too high by an order of magnitude (1% of all consumer spending).

[Dauphin]

Why is 1% too high? Whilst LexisNexis may be wrong, I'd like to know what factual observation you are basing your comment on. I'll agree that what I quoted is comparing apples and granny smiths, but the detail behind the headlines is reasonably indicative of the overall cost to merchants of fraud, fraud prevention, and other fraud related costs.

In case you are interested. I found some interesting reading that online fraud is measured at over 1%.

http://www.mcafee.com/us/resources/reports/rp-financial-fraud-int-banking.pdf

Fraud as a percentage of online revenue—in the United States and Canada combined—has decreased over the past few years. It stabilized at 1.4 percent three years ago, according to CyberSource, an electronic payment and security vendor.

The graph didn't go through quality control it would seem....

Another article (linking to the same source, Cybersource, said to be a VISA company):

http://www.prnewswire.com/news-releases/cybersource-surveys-of-ecommerce-fraud-show-mixed-picture-in-north-america-uk-114107834.html

At least one headline result shows differing directions. In the U.S. and Canada, online merchants say their 2010 fraud rate (the percent of accepted orders which later turn out to be fraudulent) remained at 0.9% for the second straight year. U.K. merchants, on the other hand, say their fraud rate rose from 1.6% in 2009 to an average of 1.9% in 2010—twice the rate seen by U.S./Canadian merchants. CyberSource experts point to a number of likely causes for this development in the U.K., ranging from the greater incidence of cross-border eCommerce within the European region to "fraud migration" in which fraudsters, facing stiff challenges in one location, simply direct their efforts elsewhere, including the U.K.

Fraud rate: On average, North American merchants say less than 1% (0.9%) of online orders received were fraudulent in 2010, identical to the year before. That translates to a 2010 merchant dollar loss of approximately $2.7 billion.(1) This is the second consecutive decline in North American fraud losses. CyberSource estimates U.S./Canadian merchants lost $3.3 billion in 2009, and $4.0 billion in 2008. U.K. merchants saw an uptick in their fraud rate from 1.6% to 1.9%. Both of these regional averages vary dramatically by merchant size, larger organizations typically doing better at finding and rejecting fraudulent orders than their smaller counterparts.

And from cybersource itself:

http://www.cybersource.co.uk/news_events/releases/28thjan09.html

Fraud is taking a bigger bite out of UK online revenues. One in eight businesses in 2008 suffered fraud losses in excess of 5% of total online revenues, while rates of more than 1% are now common. The figures come from a survey of 150 online merchants undertaken by CyberSource Ltd., the UK-based subsidiary of CyberSource Corporation. The survey was conducted by research group Vanson Bourne—the findings constitute the fifth annual UK Online Fraud Report, available now.
...
But the cost of fraud cannot be measured in direct losses alone: more than one fifth of merchants reject over 5% of orders on suspicion of fraud, and some of these orders are likely to be valid. Merchants also have to shoulder the cost of implementing various anti-fraud tools and employing staff or outsourced service providers.

[pchang]

Online transactions are a small fraction of the overall credit card market. You should also keep in mind, that the sources you are using stand to benefit by estimating on the high side and stimulating consumer/business fear.

[pchang]

In the spirit of making Albie's head explode, I spend close to $100,000 a year on my credit cards. I also save over $100,000 a year.

[MikeH]

In the UK the merchants were covered for everything where the customer was present.

The issue was, merchants had to buy their own PoS machinery. Any change to chip and pin would incur a cost. A card issuer might want to move to offering chip and pin to win customers, but the card issuers all use the major card processing networks. They couldn't get it into shops without having a critical mass of customers that would mean a merchant had to upgrade to chip and pin or they'd lose too much business. And shops wouldn't move to the new PoS computers unless they were going to miss out on a huge proportion of cards. And customers wouldn't move to a chip and pin system that they couldn't use anywhere.

Which is why I think the market imperative isn't there for it to evolve naturally, takes a slight regulatory push. Which actually the card issuers and major processing networks welcomed because it increased their profits and most of the costs born by merchants and card issuers.

[The Mad Monk]

In the spirit of making Albie's head explode, I spend close to $100,000 a year on my credit cards. I also save over $100,000 a year.

You guys are making me feel poor.

Roughly $28,000 per year on credit, $10,000 saved.