The policy excludes any loss caused by an employee, or director, of the merchant company. The policy also does not cover losses caused by mechanical failure or an error or omission in programming. The Underwriter must be certain of the security within the gateway, and all transactions must follow through the authorized gateway. The merchant must not have the ability to override the system. These can be very sophisticated groups that have access to machines that stamp out a card and include a magnetic strip.
Thieves use the advantage of anonymity on the net to commit fraud.
The cost of stolen items, the loss of sale profits, and the additional cost to process the charge-backs. In most cases, the Internet merchant is liable for fraud even if the bank authorized the transaction. The incidence of Internet credit card fraud is highly dependent on the product category, brand, visibility of the site and whether the product is physically or digitally delivered. Digital goods are products such as software, music, videos, graphics, games or information that can be delivered on-line in real time. The insurance policy, not general descriptions in this website, will form the contract between the insured and the insurance company.