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One benefit that checks have in consumers’ minds over credit cards is that consumers believe they are safer than credit cards. A survey from the Washington, D.C.-based National Consumers League showed that 59% of consumers believe that it is safer to pay by check online than by credit card. Some industry observers attribute that to banks’ advertising about the importance of protecting credit card numbers. But the truth is that consumers have less exposure to fraudulent transactions on credit cards than they do to fraudulent transactions on checks. Consumer liability on credit cards is limited to $50 if the cardholders reports theft or unauthorized use within a certain period. Card issuers often waive even that liability. Furthermore, cardholders can dispute transactions months after a purchase takes place and still get their money back. With checks, the protest has to take place within a couple of days and then the conditions for return of the money are tighter.
But it’s also true that the fraud rate on check transactions is lower than the fraud rate on credit card transactions. Most e-check advocates characterize fraud on check transactions as insignificant. “Much credit card fraud is stolen credit card numbers or consumer fraud-a customer orders a product then says he didn’t order it and keeps it anyway,” Kerlin says. “We see almost none of that with check payments.”
One aspect that keeps consumer fraud low is the work it takes for a customer to disavow a check transaction, Kerlin says. Typically, a customer disputing a check transaction has to visit his bank and file a notarized affidavit that he did not conduct the transaction. To dispute a credit card transaction requires only a letter and often credit card banks will handle the dispute with a phone call. Furthermore, Kerlin says, he knows of no rings of criminals who sell checking account numbers, yet there are well known cases of web sites selling credit card numbers and even swap fairs where criminals buy and sell numbers. “Fraud is a non-issue with online checks,” he says.
AmeriNet addresses another area of dispute with credit card transactions by providing not only the payee of the check but also the product name on bank statements. Usually only the name of the vendor-and often it’s a corporate name rather than a brand name-appears on a credit card statement, resulting in, at best, consumer’s, card issuer’s and merchant’s time to identify the product purchased and, at worst, a chargeback to the merchant because the customer did not recognize the purchase. AmeriNet also provides on the statement the phone number of its call center so if the customer has a question, he can call AmeriNet to resolve it, resulting in saving a call to the merchant. “Our whole model is designed to support the merchant,” Kerlin says.