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*AmEx Launches E-Commerce Fraud Prevention Network

SAN DIEGO — Aiming to fight the growing incidence of fraud and its effect on merchants, American Express Co. joined with online retailers and marketers to launch the Worldwide E-Commerce Fraud Prevention Network at the National Retail Federation's NRF.com conference here this week.

Charter members of this industry trade body include buy.com, Starwood Hotels, Ventro Corp., American Express, First Data Corp., ClearCommerce, Paymentech and card processors.

“The sense of urgency,” said Marie Aloisi, vice president of retail industries at American Express, “is that e-commerce is growing exponentially, and yet there are millions of consumers that aren't transacting on the Net. And as e-commerce is growing, so is fraud. So, early on, we want to address it, attack and then prevent it.”

The goal of the network, located at www.merchantfraudsquad.com, is to share fraud prevention information and best practices among members to strengthen online security and slash costs associated with fraud.

“The benefits from our point of view are many: to share what we know to help raise the bar for e-commerce overall, to learn from others so that we can continually improve our fraud prevention, and to increase consumer confidence in online commerce,” said Travis Fagan, vice president of customer service at buy.com, Aliso Viejo, CA.

Among the activities planned for the trade body are fraud prevention workshops and a summit next year, as well as the hiring of market researcher GartnerGroup to study fraud prevention measures and offer members quarterly white papers on key relevant topics.

The Web site is envisioned as a clearinghouse of information about fraud prevention best practices and trends, security seminars, law enforcement organizations, software vendors and tips for safe online shopping to boost consumer confidence. Partnerships with law enforcement agencies, consumer groups and better business bureaus are planned.

American Express will fund the network in its first year. Charter members will support the trade body in the second and third years. Membership is free to general members. The other memberships are founding or charter members and advisory members.

To qualify, members must encrypt all password and credit-card information, maintain data transmission in a secure environment with restricted authorized access, update fire walls and security software, and contact law enforcement agencies if fraud is suspected.

“This is an industry coalition that is unique because it is developed by merchants for merchants, and the specific practices of merchants are addressed,” Aloisi said.

Members are not required to accept American Express cards to join the network, the New York financial and travel services company said.

But while the intent is to share information on fraud patterns, members are clear that they will not violate consumer privacy. Nor will they share confidential data.

“We will not share individual customer information. We will not share detailed financial information,” buy.com's Fagan said. “We will share as much knowledge on buying habits on an aggregate basis with our partners in this network to help us all eliminate fraud.”

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