Credit Cards Online Information

If you've ever thought about using peer-to-peer file-sharing systems to search for more than music, here's a simple test: enter "Visa" in the search box.

Chances are you'll come up with at least one hit. I did. I turned up dozens of credit-card numbers, although only one came complete with name, card number, and expiration date.

Luckily, when I called to report the (apparently) stolen card, the operator told me that the owner had already reported the card missing and the number had been invalidated. Still, a friend who tipped me off to this was amazed that such information could be so easily found on the Internet. While the days of typing in "credit card" in a search engine and finding a dot-com's database are long gone, a wealth of data is still out there for the taking.

Worried? I was, a little.

The problem's even complicated by the way the system works. Frankly, the easiest way to check whether the card was legitimate is to…use it. I didn't, of course—I doubt the local jail is wired for Ethernet. Unfortunately, when I called Visa's press information line, no one there was able to confirm whether the card was valid and referred me to the member bank. Of course, I didn't know or care which bank issued the card—and neither does eBay.com, Amazon.com, or some random porn site, for that matter.

Finally, I found that Visa's "911 number" (1-800-VISA-911) referred me to the member bank, where I finally explained the problem. Still, I had to explain to the otherwise knowledgeable staffer that I didn't find the card on the ground; I found it on the Internet, where the information was just as dangerous.

Okay, I thought, is there enough here for a story? Should people be worried that their credit information is being traded more easily than baseball cards? I don't think so, no. But the whole verification process is still interesting enough to be spelled out.

As it turns out, bureaucracy is possibly the greatest protection you have online today. After being somewhat frustrated by my inability to be a good Samaritan, I spoke with Jim McCarthy, Visa's senior vice-president of new market development and deployment. In doing so, I found that the information I typically only rarely divulge online (name, address, phone number) is becoming a weapon in the fight against online fraud.

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Take these steps to protect your profits.

As the technology barriers to e-commerce fall, more and more small businesses are looking to take their sales online, eager to tap into a pool of online consumers that IDS projects will reach 128 million by 2002. E-commerce application and hosting service providers make it relatively simple and inexpensive for Web-enabled businesses to turn their home pages into full-fledged online stores, opening up the e-commerce arena to even the smallest businesses. However, there's a hidden danger that many newly minted e-business owners fail to take into consideration: the problem of credit card fraud.

While conventional wisdom holds that merchant fraud is the main form of credit card abuse, the reality in the e-commerce world is that the merchants are far more frequently the ones defrauded, whether through credit card theft or so-called "friendly fraud," in which customers dispute the charges but nevertheless keep the merchandise. A survey conducted by the Gartner Group this year of major online retailers has shown an average of 2.64 percent of Internet transactions are charged back, compared with 1.24 percent among bricks-and-mortar retailers. Gartner research also shows that credit card fraud is at least 10 times as prevalent online as in the physical world, accounting for 1 percent of all e-commerce transactions.

The issue may not even occur to many business owners as a potential problem. After all, in the world of the physical store-front, credit card companies typically shoulder the risk in the case of fraudulent or disputed charges. So long as the merchant can provide a receipt with a customer signature, that merchant cannot be held responsible for charges that have been approved by the card issuer.

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ENTREPRENEURS HAIL FROM HUNDREDS of disparate cities, industries and backgrounds, but one thing they have in common is an appreciation for plastic. Paying by credit card is convenient, it allows business owners to maximize their cash flow, and it offers the accumulation of rewards or points that can add up to thousands in free services each year. For regularly recurring bills, however, nothing beats the convenience of automatic bill payment, the kind typically offered online through consumer and business checking accounts.

Now, paying recurring bills automatically by credit card, which offers the best of both worlds, is catching on big with small businesses. Over the past two years, New York City-based American Express has seen its charge volume for automatic bill pay for small-business customers grow by 30 percent per year, says Karen Rosenberg, vice president of OPEN from American Express, the company's small-business trait. She sees it as a way to replace check-writing, with added benefits. "It helps [business owners] consolidate spending on the card and lets them better track and manage cash flow," she says.

American Express and its rivals, MasterCard and Visa, have all developed sophisticated online reporting tools to enable users to keep track of expenses and slice and dice them for budget purposes. Looking at a monthly or quarterly statement, business owners can see how much they're spending on utilities or subscriptions, or on overnight deliveries, says Doreen Amano, vice president of global product development at MasterCard International in Purchase, New York. "That can potentially help with negotiation with vendors when it comes to rate reduction," she notes.

For Ava Seavey, president of Avalanche Creative Services, an advertising firm based in New York City, convenience and the consolidation of expenses were key reasons to sign up for automated bill payment with half a dozen recurring vendors. Seavey's company employs only four full-time people but boasts several high-profile clients, and she only has part-time financial help from her controller and bookkeeper. "So anything I can do to save my time is worthwhile," says Seavey, who uses American Express for most business expenses. "I find that this minimizes the paperwork. Time is money, and writing checks costs money."

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