Internet merchants to fight credit card fraud
A New York Times story on the Internet version of a neighborhood watch:
Internet merchants, weary of a near constant barrage of credit card fraud that costs them more than $1 billion each year, are joining forces in hopes of helping one another identify users of stolen credit cards, catch criminals and perhaps soothe the fears of millions of potential online shoppers.
A group of the Web's biggest e-commerce companies, tentatively called the Internet Merchant Fraud Roundtable, has formed over the last year, with the goal of creating a database that merchants could use to block potentially fraudulent transactions and help snare people who commit credit card fraud. The group hopes to have the database set up by the first half of next year.
...While no e-commerce merchant group has tried to address credit card fraud on such a big scale, there is precedent for a similar type of information gathering. CardCops, a credit card fraud watchdog company, has created a database of what it believes are stolen credit cards, and offers that database on CardCops .com free to users who can check to see if their numbers have been stolen.
According to Dan Clements, CardCops's chief executive, the database, which typically contains about 100,000 card numbers at a given time, is compiled from Web sites he said were frequented by card thieves. Mr. Clements said that to avoid violating the privacy of a credit card holder, only the 16-digit account numbers are carried in the database. He said it was nearly impossible to trace the number to a person's name without other information and that he cleared his methods with Visa before moving forward with his service.