Groupon says its focus is on the bottom line, rather than top-line growth.
Within weeks of one another, Oklahoma City-based Creative Risk Management Solutions and London-based James Hampden Insurance released products aimed at insuring retailers against card-not-present losses.
One reality of selling on the Internet is that there will always be fraud; the card-not-present environment almost begs criminals to try their hands at various tricks. Even with the best technologies, some fraud still slips through. Now online retailers can buy insurance that will protect them from losses due to high-volume fraud.
Within weeks of one another, Oklahoma City-based Creative Risk Management Solutions LLC and London-based James Hampden Insurance released products aimed at insuring retailers against card-not-present losses.
Creative Risk Management’s Web Merchant Guard, launched in December, is now being used by two retailers--an online seller of consumer electronics a multi-channel clothing retailer--whom the company won’t identify.
The Web Merchant Guard policy covers the merchant for unauthorized credit card charges in the cases of forgery and theft. Merchants must submit their fraud score from a neural net system in order for CRMS’s carrier, AIG International, to determine the merchant’s premium. That cost can range from three basis points of annual sales up to 10 basis points of annual sales, says Tom Mulligan, president of Creative Risk Management Solutions.
Mulligan says the company is offering the insurance in response to incidents in which online retailers have gone bankrupt because of one incident of large-scale fraud. "Fraud detection systems and business rules to prevent sketchy transactions from occurring are not fool-proof," says Mulligan. "Fraudsters are not afraid of Verified by Visa or any other fraud system. Tomorrow, they could figure out a way to crack any system. With this type of insurance, the merchant is covered regardless of what system they use."
The Web Merchant Guard product is being sold as part of package offered by Hartford, CT-based RC Knox & Co, the insurance agency subsidiary of People’s Bank.
Hampden Insurance announced last week that it will reduce premiums by up to 25% for retailers who use ClearCommerce Corp.’s ClearCommerce Risk Management software. It has been offering the insurance since October.
The insurance reimburses merchants for the value of goods or services lost, shipping costs, plus any penalty charges imposed by the card companies and acquiring bank for unusually high occurrences of fraud.
"Both the underwriter and our agency find that technology exists that is effective in detecting and preventing potential fraud before the purchase is completed," said Haydn Hertz, director of James Hampden. "The ClearCommerce Risk Management solution is especially attractive to us, because the terms of the insurance policy itself can be integrated as screening rules, highlighting for the business when a transaction falls outside of the terms of the insurance policy."