Introduction
Since its inception, access to and use of the Internet has grown tremendously. Presently, people are able to access the Internet through different means including computers, mobile phones and other portable devices. Unlike in the traditional business setup, business enterprises in the contemporary world have been compelled to use the Internet in order to survive in the current competitive business world.
Through the Internet, businesses can advertise, sell their products or services, buy what they need, and interact easily with collaborators at different levels. Availability of the Internet has in turn led to the development of e-commerce which is presently a very vital business tool that has enabled many business enterprises to expand operations and reach a wider market.
The growth of the Internet has, however, not been without threats and challenges. As pointed out by Scassa and Deturbide (2004), one of the greatest concerns regarding Internet usage concerns privacy and security.
In the absence of strict security guidelines, data can easily be accessed by unauthorized individuals who may use it to harm a business enterprise. Intellectual property assets are equally vulnerable to attacks. It is thus important to have a solid understanding of legal matters that relate to online business and e-commerce in general.
This paper looks at e-commerce and the various issues that affect electronic payments. Specifically, it examines how credit card fraud issues are handled in Canada as well as in the US.
Credit Card Fraud Issues in E-Commerce
Concerns about secure use of credit cards started in the 1990s. This led to the development of protocols such as secure socket layer (SSL) and secure electronic transaction (SET) to reduce credit card fraud incidences and ensure the safety of credit card transactions. It became necessary to have firewalls in place, ensure that security patches are kept up-to-date, and to make sure that any data transmitted is encrypted.
Another issue relating to credit card fraud in e-commerce has to do with repudiation. Apparently, without ensuring that reliable processes exist along the e-commerce chain, it is possible for an individual or a business enterprise to deny having authorized an e-commerce transaction.
In Canada, it is illegal for any one to access private identity information without the authority of the owner. Under the Canadian criminal code, accessing private identity information is prohibited and anyone who commits such an offense has to be sent to prison for up to five years. On the hand, rampant cases of credit card fraud in the United States have forced the US government to come up with strict laws to protect card holders.
According to the Act, it is illegal for an individual to be in possession of identify information belonging to another person, to be used for personal or even non-personal gain. A person found guilty receives a jail term besides the expectation that he or she has to pay a fine. Moreover, The US Credit Card Fraud Act of 1984 makes it illegal for a person to be in possession of 15 or even more credit card numbers (Anderson, Ferro, & Hilton, 2010). Among other things, these laws are designed to protect innocent citizens.
Comparison of Canada and the United States
Zero liability refers to the fact that consumers do not have to pay anything in the event that their credit cards are used in a fraudulent manner. It is an assurance to credit card holders that no matter what happens, their money is safe and no room exists for illegal transactions that may lead to monetary loss. Moreover, it credits a framework under which credit card business can thrive. Zero liability is thus beneficial to credit card issuers as well as card holders. More importantly, however, it provides governments with a means to secure the interests of innocent citizens.
In Canada, zero liability is a company policy due to the fact that credit card issuers have an understanding with card holders. The application of zero liability in Canada is thus dependent on how a credit card holder is regarded by the issuer of the card. Zero liability is applicable to a customer who can prove beyond any reasonable doubt that he or she did everything possible to guarantee the safety of the card. Security is an important consideration for credit card issuer as well as for credit card holders. As a result, credit card issuers are expected to do everything possible to guarantee the safety of credit cards.
There are other things that credit card holders are required to comply with. Customers are, for example, expected to immediately alert credit card issuers about a missing card in order to avert any possible damage. It must also be possible to determine that the account held by a particular customer has a positive reputation. Credit card holders must also act in accordance with agreed terms and conditions. In the event that a card holder fails to meet the above requirements, determining the extent of liability has to be in line with the agreement between the card holder and the card issuer. There are other reasons that may also lead to non-application of the zero liability policy.
According to Petrovich (2014), a credit card holder is entitled to a reimbursement if a bank thinks that he or she did not knowingly contribute to the occurrence of a fraud. It is, however, important for the card issuer to ascertain that the card holder is honest and that he or she acted prudently. Without such evidence, the credit holder might be held responsible for the fraud against his or her credit card.
Therefore, while zero liability is only a company policy in Canada, the onus is on the credit card holder to take the necessary precautions while using the card. To a large extent, the agreements made between card issuers and card holders are meant to ensure that customers do not take advantage of any possible weaknesses to benefit unfairly from the card issuers.
In the United States, zero liability exists as a law to protect all credit card holders and to deal with perpetrators of credit card fraud. As a result, card holders are protected by the zero liability law and have absolutely nothing to be afraid of. Certainly, this is unlike what is experienced in Canada. Zero liability for credit card holders in Canada largely depends on the extent to which it can be determined that the card holder did everything possible to ensure the safety of the card.
Zero liability will thus not apply if there is evidence of recklessness on the part of the card holder. Despite the differences that stand out concerning the application of zero liability in the two countries, there are some similarities that can be singled out. The need for card holders to be very careful in the way they take care of cards, for example, is important to both countries and can not be underestimated. It is imperative for every card holder to see to it that the safety of the card is guaranteed.
I believe that credit card fraud is a serious offence that must be dealt with strictly in order to curb the vice in the society. For this reason, it is better to have zero liability as a law rather than a company policy. The US approach is thus preferable to that of Canada. Rather than leave the security of credit cards to be determined by agreements between credit card issuers and card holders, it should be the responsibility of the government and law enforcement agencies to see to it that card issuers as well as card holders are fully protected under the law.
According to some scholars, stakeholders are concerned that the Canadian approach may be expecting too much from credit card holders (Petrovich, 2014). Opponents of the Canadian approach are generally in agreement that the responsibility to deal with credit card fraud issues should be left squarely in the hands of state governments. Undoubtedly, this is an important task that can no be given to agreements between credit card issuers and card holders.
Given that e-commerce is here to stay and that the use of credit cards will continue to grow, it is imperative to figure out the best approach to deal with credit card fraud. The existence of an environment where credit card transactions can be undertaken securely is critical to promote the growth of e-commerce and increase the use of credit cards in business transactions.
In the absence of such an assurance, the growth of e-commerce will certainly be hindered and credit card operators will be the biggest losers. According to McNally (2012), the consumer service industry in the United States is determined to ensure that every possible barrier to the growth of e-commerce and the use of credit cards is completely eliminated. For this reason, the US government requires credit issuers to offer zero liability for fraud losses since this is the feature most demanded by credit card holders.
Having zero liability as a law in the United States is meant to encourage existing credit card holders to continue using the card and persuade those who are not yet utilizing the cards to start doing so. In addition, zero liability is responsible for creating a healthy ground for the growth of e-commerce and use of credit cards in business transactions.
Conclusion
Given that e-commerce presents business enterprises with a great opportunity to improve performance and expand the market reach, it is imperative to ensure that the security of credit card transactions is not compromised in any way. Doing so will increase consumer confidence and promote the growth of e-commerce throughout the world.
While the approach taken by Canada to control credit card related fraud is helpful to some extent, it certainly has weaknesses that can easily promote credit card fraud. For better performance, the US strategy should be adopted and criminals must be dealt with accordingly. Without a doubt, subjecting criminals to tough punishments under the law will urge them to avoid credit card fraud.
References
Anderson, G., Ferro, D. & Hilton, R. (2010). Connecting with Computer Science. Boston, MA: Cengage Learning.
McNally, M. (2012). Identity Theft in Today’s World. Santa Barbara, California: ABC-CLIO.
Petrovich, C. (2014). Bank Customer’s Lawsuit Raises Questions about Fraud Liability. Web.
Scassa, T. & Deturbide, M. E. (2004). Electronic Commerce and Internet Law in Canada. North York, ON: CCH Canadian Limited.