CNN reports that the Social Security Administration alone received 30,000 complaints in 1999, up from 11,000 in the previous year. And the federal government estimates that as many as 500,000 people are targeted each year a threat of such great proportions that the Federal Trade Commission has launched a special Web site to educate the public and inform victims how to respond to identity theft. Resource Guide Start your e-business right with How to Dotcom by Robert McGarvey. What's more, financial industry experts estimate that losses associated with credit card fraud are in the billions annually. In view of these alarming figures, it's easy to see why everyone should approach fraud with renewed vigilance and why credit card processors are rediscovering the value of preventive care.
Merchant accounts are equivalent to unsecured lines of credit.
Diligent companies scrutinize all merchant applications, closely monitor account activity, and provide merchants with the training and resources they need to protect themselves. Credit card processor Cardservice International , for one, has a proprietary monitoring system that automatically flags suspicious account activity, such as sudden spikes in transaction volume. When abnormal activity is identified, the company's loss-prevention analysts match sales records with returns and compare shipping addresses with billing addresses. If necessary, the analysts also contact merchants and cooperative issuers to verify transactions. Organizations like Cardservice International protect their Internet merchants by storing card information behind multiple firewalls at secure payment gateways.