Make no doubt about it: the criminals are winning the war when it comes to online fraud. This is one fight that isn't even close.
From credit cards to identities, theft and fraud on the internet has been a boon to criminals of all shapes and sizes.
Can these criminals be defeated? How can they be defeated?
A new credit card that is being tested by Visa offers some hope. This experimental card doesn't look or act like your standard credit card. The Emue Card as it is being called instead has a display on the back that enables the generation of a unique code each time it's used.
The idea behind the system is to make it much more difficult for fraud to be used in card-not-present transactions such as those that take place on the internet. Today's chip and PIN technology only combats fraud offline.
Here's how the Emue Card works: when making a purchase online, you enter your PIN into the little keypad that exists on the card. Assuming the PIN is correct, an auto-generated code is shown on the card's display and you enter that code into the appropriate field on the website payment page. This serves as an additional authentication layer for the transaction that would make it much harder, if not impossible, for criminals to engage in online fraud.
Because all the information needed to use a stolen credit card in a card-not-present environment is currently displayed on the credit card, it's easy for criminals to sell and use stolen credit cards. The Emue Card would change that by essentially requiring the possession of the original card and the correct PIN since there'd (in theory) be no other way to authenticate Emue Card-enabled transactions.
Unfortunately, you won't find an Emue Card in your wallet tomorrow. 500 Deloitte employees are testing it out and if Visa decides to pursue it after their trial, the process of getting it to consumers at large will not happen overnight. Visa will need to make sure it works flawlessly with its global network and banks and credit card companies will have the final say on adoption.
Nonetheless, expect to see more sophisticated fraud prevention solutions like the Emue Card being tested in the future. Credit card fraud is a real pain for everybody in the payment food chain, especially online merchants, so new technologies that are consumer-friendly and make the economics of fraud less appealing to criminals will be widely welcomed.
Photo credit: The Consumerist via Flickr.