Posted in an MSN discussion group for Credit Cards:Visa, AmEx Profit from Online Fraud. This posting says that three merchants have filed a suit against American Express, Visa and Discover claiming that merchants have paid the costs associated with fraud and theft and that, "the associations use monopoly power to force merchants to sign unfair contracts."

Here’s the gist of the complaint (and it hits home since Acme Technologies was recently hit with a slew of online web sales from people using stolen credit card numbers in an attempt to discover which accounts were still active): when a stolen credit card number is used to purchase goods or services online, the issuing bank recoups the amount charged from the merchant, while NOT refunding the discount fees and transaction fees paid, and in the case of a chargeback (where the customer has contested a charge on their account), the merchant ends up paying those fees too.

But central to this suit is the fact that redit card associations and issuing banks don’t immediately cancel the cards or inform consumers; they simply watch the list of potentially stolen cards and look for signs of actual fraud. That happened earlier this year when systems at Data Processors International in Omaha, Neb., were compromised, and 8 million card holders were put at risk.

Moreover, speaking from personal experience, there have been several occasions where I’ve had lists of account numbers which were sent through my online store, which I know to be fraudulent based on contacting the card holders, but there’s no agency — including my merchant account provider — who will take charge and deal with notifying the consumers or issuing banks. They just don’t care, and why should they since they profit from this!

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