Beware the scammers
I recently read your article about the Indonesian credit card scam, "Reseller caught out in $25,000 scam" (March 20, page 1). We can relate to Bruce Bathols' experience. About three years ago we copped over $38,000 worth of fraudulent transactions from overseas, and due to our ignorance of the credit card authorisation system and merchant liability, we received charge-backs for the order of over $32,000. We were forced to take out an overdraft with Bankwest for these charge-backs, which we are only just finalising payments for this year!
We run a rather busy e-tailing store in the computer resale market and regularly receive fraudulent credit card orders from inside Australia, not to mention regular orders from places like Indonesia. We do not ship overseas any more, except in rare circumstances, and never to places like Indonesia. Commonsense would tell you that they can buy products cheaper in nearby Asian countries anyway!
I am very surprised that Bathols was not more knowledgeable about the credit card system, having been in business for some time. Every fraudulent transaction gets charged back to the merchant, the bank takes no responsibility and authorising a transaction does absolutely nothing other than check the financial institution's computer to see whether money is available to credit the card! The banks do not emphasise this fact when you sign up with them as a merchant, either. Bruce has to take the blame though, I certainly blame ourselves for being so plain stupid. Like your article said, we were motivated by the dollar signs and didn't do the research, simply assuming that the bank would back its authorisation.
We have had to implement a careful process of filtering out fraudulent online orders from within Australia. Last year, we were involved in another NSW credit card scam and were liable for over $10,000 worth of equipment. The police caught the young fellow in question, who had also taken Telstra and other resellers for many thousands. Unfortunately, the police retained most of the equipment and all we got was a court order for this guy, who has no job to pay for the outstanding fees.
I think in a good year most computer credit card merchants can expect losses in the area of $1000-$5000 from credit card fraud. However, it all depends on the sales volume and the procedures in place within the organisation to validate orders and protect against this kind of thing.
James Pearce, Simline.com, WA.
The headline in your March 20 issue read "Mercury boils over" (page 1), which refers to Mercury IT, a retail and integration company.
As this has caused a little confusion with some of our customers and partners, I just wanted to clarify that Mercury Interactive, which provides enterprise testing and performance management solutions, is alive and well. In fact, our financial results for FY 2001 showed an 18 per cent growth with revenues of $US361 million, and we have over $US500 million cash in the bank.
Graham Sowden, Mercury Interactive, Sydney.