For small transactions, many of us depend on credit cards as effectively online insurers, because credit card companies will void fraudulent transactions. This was necessary a few days ago for thousands of transactions worth millions of dollars.

The Web hosting companies discovered the unusual charges through e-mail alerts that Authorize.Net sends after each transaction. Close to 3,000 suspicious transactions were pushed through the merchant accounts of three companies with which CNET News.com spoke, and more likely happened at other Web hosts, these three companies said.

Payment processor fears credit card crooks By Joris Evers, Staff Writer, CNET News.com, Published: April 3, 2006, 7:27 PM PDT

For once, automated online feedback mechanisms provided the leverage needed to counter the leverage crooks get by using the Internet. Also, multiple eyes at multiple merchants spotted it due to that feedback.

This is different from last year’s case in which crooks stole 40,000,000 identities from CardSystems Solutions, another credit card processing firm.

This time, collective action countered aggregate damage.

However, for larger transactions than the $500-$700 ones the crooks used this time, actual insurance or bonds may be better.

-jsq

PS: Via fergie.