Egg card will be hard to crack

Egg, the online financial services arm of the Prudential, is touting a fraud protection guarantee as a way to encourage online transactions using its new credit card.

Unveiled last Sunday (http://www.silicon.com/a32835 ), the Egg card features a low interest rate (4.5 per cent on transfers, 9.9 per cent standard), and a loyalty scheme. However, Egg chief executive, Mike Harris, also promised the card guarantees "total money-back protection against online and offline fraud".

Nick Lockett, solicitor with Sidley and Austin, welcomed Egg's move because the Consumer Credit Act 1974 only holds creditors and suppliers liable for orders worth between £100 and £15,000. He said: "As ecommerce grows, small scale repetitive frauds and errors are expected to become the most common."

However, he said Egg's promise might ultimately mean more when goods have failed to turn up, or have been damaged en route, as credit card holders have never been held liable for fraudulent use, whatever the amount.

Barclaycard, the UK's largest card issuer, felt it necessary to issue a response to the Egg Card launch, saying it does not "hold anyone liable for any transactions they neither authorised or participated in, and this also applies to transactions over the Internet."

Dave Birch, director at Hyperion, an ecommerce and management consultancy, explained that the Egg Card guarantee is a good marketing move because Internet fraud is much rarer than many consumers imagine.

He said: "There's a huge gap between people's perceived notions of Internet fraud, which is teenage hackers in their basements stealing your card as it goes past and the actuality of it, which is people either stealing numbers from all the usual places, restaurants and so on, or downloading software that just makes up random credit card numbers and feeding that through to merchants."

He and many other experts maintain there are no recorded instances of credit card details being hacked and then used illegally.

Even so, Egg is keen to advertise its security measures. In a statement, Egg said it has made a "multimillion pound investment" in technology, including 128bit encryption and double firewalls from Encommerce.