You would think with the amount of value / fraud at stake, Visa/MC/AMEX themselves would invest in fraud detection technology and offer that as a service to their participating banks and merchants.
They have so much more volume and cost absorption capability that they could spin up a much more talented / sophisticated detection group than any individual bank or merchant could, you would think? And charge for it accordingly?
Visa/MC/AMEX make a MASSIVE amount of money on Fraud - it's in their interest to perpetuate it. I've experienced this myself with > 6 figures in CC fraud in a month. Here is the financial break down:
Every time a customer gets a charge due to Fraud, they file a chargeback. If we are able to contest it, all is well, other wise they hit you with a $25-$35 fee PLUS the charge is reversed so depending on margins you are out you're costs on the transaction as well.
If the # of fraud transactions gets bad enough (even if you are working with them diligently to get things under control) and not able to stop it, they will charge you a chargeback penalty fee.
This essentially says you are high risk and so now give us 50,000 or 100,000 dollars or you can't accept credit cards AND you have X days to resolve this and get you're charge back rate to a reasonable level or we will hit you with another charge bigger charge in 30/60/90 days or whatever the risk management department wants.
They may also come back and say now we've told your processor (stripe, braintree, etc) that THEY need to charge you more because we are charging them more to deal with you. So instead of 2.5% of each transaction they are getting 3% for example.
It all adds up to billions across the world economy, it costs them only to deal with it administratively and they are collecting many many times that in fees from the merchants. It is very much a scam and the average customer doesn't realize the massive hit companies can take for the convenience of Credit Cards.
They have so much more volume and cost absorption capability that they could spin up a much more talented / sophisticated detection group than any individual bank or merchant could, you would think? And charge for it accordingly?