a fraud is a sale, Re: The bank fraud blame game

[Ed Gerck]

Nicholas Bohm wrote:
> That is why efforts by banks to shift the risk to the customer are
> pernicious - they distort the incentive the bank ought to have to get
> the security right.


Yes. Today, under current practice, there's actually a strong
incentive to keep existing fraud levels than to try to "scrub
it out" -- fraud has become a sale:

   in 2001, the last year enough HARD data was available,
   their revenue stream from fraud was USD $550 Million.
   That all came from chargeback fees against the merchants.
   And since it was fraud, the merchants lost the product
   and the income from the product along with the shipping
   costs and the chargeback fees. Merchants, of course, have
   no choice but to pass those losses on to the honest customers.

in http://woip.blogspot.com/2007/03/fraud-is-sale.html
See also https://financialcryptography.com/mt/archives/000520.html

Cheers,
Ed Gerck

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