This story was written by Keith Dawson for the Industry Standard's Media Grok email newsletter. It is archived here for informational purposes only because The Standard's site is no more. This material is Copyright 1999-2001 by Standard Media.

AmEx to Make Online Porn Purchases Safer
Sep 08 2000 12:00 AM PDT

American Express (AXP) wants you to be more comfortable spending money online, and a largely admiring press is helping the effort. AmEx unveiled some privacy and security initiatives, leading off with a program of disposable credit-card numbers that will be available to cardholders within a month. The scheme addresses only a few of the real online threats to consumers' financial data and privacy, but the press was too busy praising AmEx's creativity to point this out.

Online merchants pay higher fees to credit-card companies because they incur higher rates of fraud. Also, unlike their brick-and-mortar counterparts, virtual stores - not their banks - bear the cost of such fraud. While AmEx's one-use credit card number promises to lower this risk for online merchants, no one was talking about the company lowering its fees because of lowered risk, as the Wall Street Journal noted.

CNET's 27-paragraph story rehashed some recent instances of hackery aimed at online merchants' stored credit-card numbers. The story quoted a PricewaterhouseCoopers analyst praising the AmEx initiatives as "the full monty." CNET followed up with an analysis by the Meta Group, which took a harder look at the overall risk environment.

None of the AmEx coverage mentioned today's other credit-card fraud story. A Los Angeles judge has ordered three operators of a pornographic Web site to repay $37.5 million in fraudulent credit-card charges. The FTC charged that these operators got their database of 3 million credit card numbers the old-fashioned way: They bought them from a bank. The scammers inserted phony porn charges on the accounts of at least 900,000 cardholders, half of whom don't even own computers.

The Wall Street Journal attempted to get comments from the three fraudsters. One is in jail, one has fled to the Caribbean, and the lawyer of the third said, "All she did was deliver pizza ... a couple of times."

Wired News linked their coverage to a story from early this summer, when American Express announced it would no longer do any business at all with online adult sites. Now at least AmEx cardholders will be able to spend their money in pornutopia using one-time credit cards. - Keith Dawson

American Express Credit Cards to Offer Disposable Numbers for Web Shopping
Wall Street Journal
(Paid subscription required.)

American Express Offers Aegis for Online Payments

Amex Deals Disposable Credit (AP)
Wired News

AmEx Unveils 'Disposable' Credit Card Numbers

Commentary: AmEx Plan Lessens Risk for Customer, Merchant (Meta Group)

Hardcore Fraud by the Millions
Wired News

Porn Web Site Is Ordered to Repay $37.5 Million
Wall Street Journal
(Paid subscription required.)

Web Site to Pay $37.5M for Billing Scam
USA Today

Porn Sites: Give Us Some Credit
Wired News