Getting Approved for a Credit Card

New innovative measures must be developed to control the increase in credit card fraud, especially fraud utilizing the Internet. These individuals conceal their identities by using multiple hosts and networks to reach their targets and trying to trace them to their point of origin through multiple organizations and across multiple continents is very difficult. Online credit card fraud is a faceless crime and the thief does not have to be near or even know his victim. In the event that the thief is identified, obtaining and developing evidence across several jurisdictions, particularly outside the United States can be very demanding. In many cases, extradition laws do not exist, and the cost to prosecute is prohibitive.

Many online companies fail to establish effective security procedures and some have nonexistent security measures in place making it extremely easy to steal thousands of credit card numbers at a time. Some companies fail to encrypt data properly or poorly implement encrypting schemes and software vendors are writing insecure code that leaves transaction logs available for the taking. Consumers are using their credit cards online using insecure protocols such as SMPT or HTTP.

How Visa System Works

There have been numerous security breeches this year including:

• MSNBC reported 485,000 credit card numbers were stolen in January and stored on a government site;
• Cnet reported 350,000 credit card numbers were stolen from CD Universe's Web site;
• Cnet reported that SalesGate had 2,000 to 23,000 credit card numbers stolen;
• MSNBC reported C I Host Web site accidentally left 10,000 credit card numbers exposed;
• MSNBC reported that Visa was targeted and successfully compromised.

Steps are being taken as some banks are providing free readers that attach to personal computers to verify online purchases by transmitting data directly, making online shopping easier and more secure. The consumer pushes the card through the reader, input a four-digit password to activate the card and proceed directly to a "Smart Checkout." The cards and readers provide assurance to Internet merchants that the consumer on the other end of the transaction has a card in hand and not just a credit card number, thus reducing fraud and payment disputes. This will result in merchants and banks save money. American Express is expected to charge approximately $25 for the readers in 2001, but the need for external readers may be temporary as I expect computer manufacturers to build smart card readers into computers as demand increases.

Consumers will be able to control what information is on their smart card and control that information so one merchant will not be able to see what was purchased at other online retailers. The smart card comes with a lock on it as a four-digit code that the cardholder knows and you will have to know the code to unlock the card.

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