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« Security reporters | Main | A chat room of the old kind »

More post-modern policing

By davebirch posted Jul 3 2007 at 11:00 PM
[Dave Birch] There's been a bit of a fuss in the media here about card fraud. I paraphrase, but essentially the police are too busy to investigate credit card fraud so it's been agreed that it's up to the banks to sort it out. This is being reported (incorrectly) as card fraud being decriminalised and the newspapers say that the Home Office is failing to take credit card fraud seriously. In essence, under some guidelines which came into force in April, it is now the responsibility of banks to decide which offences to pass on for investigation. Critics suggested the move is being made to reduce crime figures and "demanded a rethink". Now, I have to say that I've often argued for this policy: it's a bank problem and it should be up to banks to take the lead in sorting it out (and paying for it). But you can see how the spin could have been managed better: perhaps labeling the policing of card fraud as post-modern rather than as low priority.

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This led me to think about other ways in which modern payments subject to post-modern regulation and I remembered an interesting example from a couple of weeks ago. Someone wrote to The Daily Telegraph to sort out a payments problem. The person had asked one of the U.K.'s largest insurance companies to transfer some money to one of the U.K's largest banks. After six weeks the money hadn't arrived and when the customer checked, it turned out that the insurance company had sent it by cheque and, somewhat predictably, the cheque had been stolen and cashed by an identity thief. Here's the cute part: the newspaper columnist says

The police then suggested you wrote to this column
After the newspaper spoke to the insurance company, they insisted they were not legally liable but agreed to pay back the £7,649 as a goodwill gesture. So, essentially, reporting the crime to the police was a waste of time but complaining to a newspaper got the money back. The details of the story aren't that relevant, but it left me thinking "why in the year 2007 would a large insurance company pay a large bank several thousand pounds using a CHEQUE"? How is the payments system working for the economy if it support these kinds of choices? Why are you even allowed to write a cheque for more than a few hundred euros anyway? Surely one of Britain's largest banks has its own IBAN sorted out by now?

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]


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A couple of points:

1) If a card holder reports fraud from an online transaction to their bank, the bank will ALWAYS give a refund to the cardholder. They will take the amount of the transaction PLUS a chargeback fee from the online merchant.

2) Economics 101: The consumer doesn't "pay" for the fraud, the merchant does so out of profit, and in the long run we all do because of the reciprocal nature of the marketplace. Prices consumers pay are based on supply and demand, not cost. A merchant can't raise prices just because he/she incurs more chargebacks. Like any unanticipated cost, a merchant absorbs it and makes less profit, perhaps employing less people in the long run, which ends up affecting us all.

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