Re: Dear Linkedin,

[Brett Frankenberger <rbf+nanog () panix com>]

On Sun, Jun 10, 2012 at 03:47:20PM -0700, Owen DeLong wrote:
> On Jun 10, 2012, at 3:06 PM, Brett Frankenberger wrote:
> > Eliminating fraud isn't an objective of card issuers.  Making money is.
> > Fraud reduction is only done when the savings from the reduced fraud
> > exceeds both the cost of the fraud preventing measure and any revenue
> > that is lost because of inconveniencing customers.  And, sometimes,
> > they'll choose to accept a higher rate of fraud if it will generate
> > enough revenue to offset it ... consider how many places you can now
> > avoid signing for small dollar purchases.  The cost of accepting the
> > additional fraud was considered worth it in comparison to the revenue
> > generated from getting people to use their cards for small
> > transactions.
>
> Right, but eliminating fraud should be an objective of consumers
> because ultimately, we are the ones paying for it regardless of who
> "eats it" on the actual transaction.

That assumes that minimizing cost is an objective of consumers.  In
general, it's not.  Maximizing utility is.

For some, minimizing cost is a major part of that. 

For me, I routinely trade money for convenience.  And I'll gladly pay a
percentage point or two more in exchange for all my credit transactions
being handled more quickly.  I'm far from the only one.  Credit card
companies keep making it easier to use their card, because they've
found it more profitable to do so.  There doesn't seem to be a market
for a card that is harder to use, but saves consumers a little money
through reduced fraud.

     -- Brett