How credit card companies handle fraud

All credit card companies based in the United Kingdom are regulated by the Consumer Credit Act of 1974. This ultimately provides a credit card holder with a number of requirements as well as protection. any misuse of the card, unless the card holder has deliberately acted in a criminal manner, must be refunded by the credit card company in charge of the card.

Sales via the internet are covered by regulations known as Distance Selling Regulations. These specify that any item bought over the internet and paid with using a credit card must be delivered to the cardholder's official address. Once the item is received the buyer than has a seven-day compulsory cooling off period,  in which time they can send the item back if they are not happy with it. This not only protects the buyer from rogue internet sellers, it also helps credit card companies protect their card from misuse and fraudulent activity.

Top credit card merchants Mastercard and Visa have gone a step further, providing a verification service for their customers which has helped to significantly cut down on credit card fraud over the phone, mail and internet. 3-D Secure requires cardholders to provide extra information which they must submit before every purchase. This is usually a password and a security question which only the cardholder can answer.

The Government continues to strive to protect credit card companies and cardholders from fraud. However, many of the larger credit card companies write off fraud as a necessary cost of doing business.


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