Released: September 15, 2007

Credit card fraud bedevils web

Source: Craig Bicknell, Wired Magazine

When Bill McKiernan opened his online shop, Software.net, in 1994, buyers showed up in droves, paid with a credit card right on the spot, and downloaded their new software.

McKiernan knew practically nothing about retailing, but suddenly he had a thriving e-commerce company on his hands. There was just one problem: More than half of the orders on his site were made with stolen card numbers.

Once the rightful cardholders noticed fraudulent charges, cancellations poured in from Software.net’s credit card payment processor. Not only was McKiernan out the cost of the stolen goods, he had to pay a penalty for the bogus charges.

“We were about to shut our doors because we were getting hit so hard with fraud,” says McKiernan. “We were losing money. We didn’t know what to do.”

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