Credit card fraud: Retailers will have to bear the costs

There is a serious power imbalance between credit card companies and merchants, says an Auckland retailer who had to absorb thousands of losses from a fraudulent transaction.

The retailer wants to know why stores lose money when they suffer from credit card fraud, not the companies whose cards are used for dodgy transactions.

Earlier this month, a shopper used a Visa card to spend about $3,000 on gift certificates and merchandise at Cactus Outdoor, a clothing and outdoor store in Ponsonby.

CCTV seen Checkpoint shows a man apparently connecting a credit card to an eftpos machine and entering a pin number, and the transaction takes place.

But a few days after the sale, the cardholder’s BNZ bank contacted the store and said it was a “card not present transaction” and the $3000 spend was not initiated or authorized by the cardholder, so he took the money back from the store’s banks. check.

Ben Kepes, managing director of Cactus Outdoor, spoke about this. Checkpoint that retailers had no choice but to accept credit cards.

“And they do it in good faith, and the credit card companies say they have a safe and secure platform, and when things go wrong, they admit no fault. The card companies that provide this platform have some responsibility when it comes to fraudulent use.

“Visa is a company that made $30 billion in profit last year and since that happened we’ve been approached by a huge number of retailers across New Zealand who were in the same situation, so I think there’s a there is an imbalance of power and an important point. the main thing is fairness and balance of power.”

In a statement, BNZ said it sympathized with the retailer and while banks facilitate card payments, the underlying card designs and their rules are managed by companies such as Visa and Mastercard.

BNZ said footage shared by the retailer showed the fraudster using sleight of hand to insert the card into the terminal, but technical records showed the card was never inserted.

“Instead, the fraudster performed a manual override—a feature that allows businesses to accept credit card payments over the phone without having to enter a PIN—known as a card-not-present transaction, a feature that merchants can disable. Transaction records support these findings.

“In this incident, the fraudster openly read the stolen card number written on his hand by manually entering it into the terminal, in full view of both staff and CCTV cameras.

“The legitimate cardholder reported this transaction as unauthorized, initiating a chargeback. Under the merchant agreement, merchants are financially responsible for chargebacks if disputes are resolved in the cardholder’s favor.”

Kepes said a physical card was present during the transaction.

“Whether he inserted it, swiped it, tapped it or whatever, he physically had the card there. We accept credit cards in good faith under the pretext that the credit card companies provide a secure platform.”

He said insurance would not cover the retailer’s losses, but there was a larger issue at stake.

“But this is not about us, I think the current banking investigation is looking at the behavior of banks that is happening in New Zealand and we are calling for that investigation to be expanded so that these credit card companies, who are frankly far more predatory, than the banks themselves – actually need to answer some questions about how they behave.

“They have a captive market and they won’t accept any blame for it.”

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