Consumers are protected by their card issuer - it is the victim retailer that loses out in every case.

Here is a tale of woe to demonstrate that.

The owner of the stereo shop where I do all my business was all excited early this summer -- he had been contacted by a retailer in Maylasia who was looking for some high-end stereo equipment that was difficult to get over there. The retailer told my stereo shop owner that the distributor for the equipment had told them that my stereo shop had this equipment, and would he be willing to sell it to them at full retail -- they needed it immediately.

Payment was made by American Express, and the Maylasian faxed him pictures of both sides of the card. American Express verified that the card was valid, and $13,000 worth of stereo equipment went off to Maylasia via Federal Express.

So far so good -- until the real owner of the credit card (somewhere in the midwest part of the US of A) declined to pay for purchases he had not made. And American Express of course wanted nothing to do with it -- since the stereo shop had not had actual possession of the physical card, but instead only pictures of it, the small print said it was the stereo shop's problem, not theirs. Turns out that the pictures of the credit card were created from scratch with Photoshop or something similar.

An expensive lesson to learn. Two lessons, actually: (1) If a deal seems too good to be true, it probably is; and (2) Credit card companies protect the cardholders, not the merchants.

tanstaafl.