Amex sets up e-fraud network

A new industry coalition set up to try and combat online fraud has come under fire for being yet another talking shop.

The Worldwide E-Commerce Fraud Prevention Network (WEFPN) is the brainchild of American Express (Amex), which said it came up with the idea earlier this year.

Seeking to make security a high priority, the initiative was quickly taken up by a raft of companies including ecommerce merchants such as expedia.com, buy.com, Starwood Hotels and Ventro, credit card processors such as Paymentech and First Data Corp, and ClearCommerce, which sells enabling technology for credit card transactions.

The key aims of the alliance are to share "fraud prevention information and best practices in order to improve web security and decrease costs associated with fraud". These issues are especially important to many merchants because they are often left to carry the cost of fraudulent transactions when stolen cards are used to purchase goods via their websites.

Amex launched WEFPN last week at a fraud prevention seminar at nrf.com, an industry trade show run by the National Retail Federation.

Steve Squeri, president at Establishment Services Canada and the US, told the seminar that the network "has the potential to do what no other fraud prevention group is doing: prioritise merchant concerns and identify specific solutions for resolving those issues".

All mouth, no trousers?
But critics have suggested that the coalition is likely to remain little more than a talking shop for the foreseeable future, and have criticised it for not delivering enough concrete benefits. For example, it has no plans to develop ebusiness security technology or even promote industry-wide standards.

Instead, it plans to hire Gartner to provide members with quarterly white papers on specific fraud prevention topics, and to research and evaluate current and future fraud prevention technologies. The results will be made available later this year and will be shared with all WEFPN members.

But Hans Michaels, a Brussels-based independent IT consultant, said: "Not good enough. There is a high level of education among ebusiness operations throughout the European Union. What is needed is a much better security structure among ebusiness companies."

"Talking shops would have been useful in the 1990s when information was scarce. If they had set this up in, say, 1998 we would have had in place a strong ebusiness coalition. As it is, it is too little, too late," he added.

But WEFPN officials claim that they intend to create partnerships with other industry players to build the organisation into an effective lobby group.

Initially, the plans are to work with consumer groups, law enforcement agencies and other fraud prevention groups to provide information and encourage best practices.

Restoring e-confidence
And even the sceptical Michaels admitted that if the network establishes itself as a powerful collective of ebusiness people interested in security, it could evolve into something more useful.

"They could act as a network exchanging details of known fraudsters and their methods of working. They could lobby government to do more for ebusiness systems, and they could create some good inter-industry technology which will halt those who seek to exploit ebusiness," he said.

Michaels added that the industry has to do something quickly, because consumer confidence in ecommerce is at an all-time low.

And other experts agreed. Peter Scott, a consultant at Borderline Security, said: "The other day there was an item on morning TV about a man who had his credit card details stolen while his daughter was online. While the industry is facing such a crisis of confidence over that sort of 'internet mugging', it needs to have something more up its sleeve than yet another collective or network."

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