Entrepreneurs 'lose £150m online'

Internet entrepreneurs are falling victim to one of Britain's fastest growing crimes as cardholder-not-present fraud rockets to a record high of £150m.

Banks, credit card companies and retailers are continuing to fight normal card fraud, which is also at record levels and has increased from 20 per cent last year.

But cardholder-not-present (CNP) fraud – where goods are bought over the phone, via mail-order or over the internet– tops the league table of losses, after it soared 24 per cent in 2004.

Small business groups have reacted to the £150m figure, saying that as the trend increases entrepreneurs continue to show a low level of CNP fraud awareness.

John Walker, policy chairman for the Federation of Small Businesses, warns that in most cases the business owner rather than the credit card company is liable in the event of fraud.

"Although it is not the case for all internet transactions, if a mail-order or telephone transaction turns out to be fraudulent, it is the business that pays, even if the transaction has been correctly authorised."

Mr Walker added that while the new system of chip and pin might help combat the use of stolen and counterfeit cards, it will not tackle CNP fraud.

"In fact there is a real danger that as chip and PIN takes off fraudsters will use the internet and telephone instead."

The FSB said they look forward to working with the banking industry to develop a solution where the issuing bank is liable in the event of fraud.

"Many small businesses are not aware that when a CNP transaction takes place, credit card authorisation is not a payment guarantee, and the FSB is working with the banking industry to improve business awareness."

The news comes in the same week that small firms have reported record levels of crime against their business.

The worst affected areas include Leeds, Bradford and Middlesbrough, with the crime capital of the UK located in Nottingham.

Almost half of firms said they wanted longer sentences for the culprits, 32 per cent want to see stiffer financial penalties and 32 per cent called for community service orders to be lengthened.

David Frost, director general of the British Chamber of Commerce, said: "Crime remains a very real problem for businesses the length and breadth of the country.

"Business crime is not a victimless crime; it undermines staff morale and distracts employers from the essential task of running their business."


9th March 2005

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