Hoping to allay consumer fears about on-line credit card fraud and preserve its position as a force in Web payment handling, Visa U.S.A. plans to announce a series of initiatives today, including the elimination of customer liabilities for lost or stolen cards or account numbers.

In a vote last week, Visa's directors decided to eliminate the $50 fee it charges consumers who fail to report a card as stolen or lost within two days. The two-day-notice requirement itself is also being dropped.

The new policy is to go into effect April 1 and apply to all Visa cards and all types of transactions.

"Our whole focus is to make sure that the consumer is protected, and we want to make sure that the on-line protections are as good as the protections that exist in the physical world," said Carl F. Pascarella, president and chief executive officer of Visa U.S.A.

Mr. Pascarella tried to dispel the belief that Visa is reacting to a spate of Web privacy and security breaches, as well as to competitors' efforts to pitch themselves as safer for Web shoppers.

"The idea was not to make this a marketing ploy or a response to Amex's Blue card," Mr. Pascarella said. Visa, he said, has been developing a number of merchant and consumer fraud prevention programs over the past year. The San Francisco-based bank card association spent more than $20 million on such programs last year, he said.

Given banks' tendency to waive penalty fees for late reporting, experts said, the new policy is likely to affect perception far more than the way credit card companies handle reports of lost or stolen cards.

But that may well be just the outcome Visa is seeking in the wake of a flurry of break-ins to retailers' and other companies' customer data bases in recent weeks.

"All of this has to do with consumer confidence," said Henry Dreifus, a data security consultant and head of Dreifus Associates Ltd. in Orlando. Visa says credit card fraud is at a record low - only 0.06% of the $724 billion in transaction volume in 1999. That translates to 6 cents for every $100 in transactions being lost to fraud.

The company said losses from Internet, telephone, and mail transactions account for only 0.01% of its transaction volume.

However, there are other factors at play. Losses due to fraudulent Internet and telephone orders are borne by the retailer, unlike transactions at physical stores where a card is presented.

Mr. Pascarella acknowledged that while banks' losses from fraud on the Internet may be declining, the same cannot be said for on-line merchants.

By some estimates, Internet merchants are losing between 1% and 6% of their transaction volume because of fraud. All of this adds to consumers' perception that on-line transactions are easily compromised. And whether banks are losing money or not, the image problem affects on-line commerce and thus their profits from it.

A number of credit card companies have already responded to such fears. For example, First USA, Visa's largest member and arguably the most aggressive marketer of credit cards on the Internet, eliminated the $50 fee on unauthorized on-line purchases about a year and a half ago, said First USA spokesman, Jeff Unkle. However, First USA, the credit card unit of Bank One Corp., maintained a charge for the first $50 of fraudulent charges in the physical world, though, Mr. Unkle said, the fee is seldom enforced.

American Express Co. announced a fraud-protection guarantee in 1998; customers who detect bogus Web transactions are not held liable.

This is not the first time liability fees have been an issue. In 1997 MasterCard and Visa announced new consumer liability policies within two weeks of each other, except they involved debit cards.

In the face of calls for legislation, the bankcard associations limited the consumer liability on unauthorized purchases on debit cards to $50. Previously, there was no cap. Visa one-upped MasterCard by imposing the fee only on consumers failing to report trouble within two business days.

A spokeswoman for MasterCard said the Purchase, N.Y.-based association had no plans to adopt a policy similar to Visa's.

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