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24 Apr 2001, Australia

Dr. Ecommerce,

When a valid credit card is used fraudulently on a merchant shop site, does the merchant have to pay? What if proper payment server, accepted as secure by the bank, is used and a credit card is used fraudulently, who pays?

Sameer

Dear Sameer:

The issue of liability should normally be stipulated in the contract between the merchant and the bank or credit card company. Unfortunately, most contracts ensure the merchant takes most, if not all, of the risk when it comes to credit card transactions over the Internet.

Certainly you should discuss this issue with banks before signing any contracts. You may also want to look into fraud insurance which I understand is starting to become available.

Good luck,

Dr. Ecommerce