Consumers lack protection at register
As a middle-class consumer, a week does not go by without at least one credit card offer in my mail. Even my father, who passed away a decade ago, still gets offers. The fight to win customers is furious as credit card providers push consumers toward a cashless economy with gimmicks and givebacks.
So I was surprised to learn that the fight to protect my data — and your data too — is far less intense. While credit card companies battle to put cards in our wallets, they are much less committed to protecting those cards with the best technology. That is not just disappointing; it is wrong.
When Americans shop, the vast majority of them do so with plastic. In the wake of serious credit card data breaches, credit card companies and banks need to get their act together and provide consumers with the best available technologies to protect our sensitive data and limit the impact of future data breaches.
They aren't doing that, and they’re hoping consumers won’t notice. Or at least won’t complain about their privacy and finances being compromised.
The technology is there to make cards — and our personal data that they carry — far more secure. Most credit cards use magnetic stripes on the back of the card, which is a four-decades old technology, predating cell phones and the personal computer.
No wonder data breaches have become so common despite best efforts of consumers and retailers to keep their information safe. Cyber-criminals know they can easily forge or manipulate magnetic stripe cards once they have stolen personal financial information. It doesn't have to be this way.
Consumer advocates have long proposed the use of PIN and chip-enabled cards – technologies available today that are already the standard in Canada and throughout much of Europe – that employ strong two-factor authentication to verify the identities of card holders.
It works there, successfully reducing identity theft on face-to-face transactions. The Federal Reserve, says the use of PINS, instead of signatures, could increase security by 700 percent.
Sure, banks and credit cards are replacing stripe cards with chip versions, but according to reports from the Wall Street Journal and USA Today, they will not include PINs because – get this – Americans aren't capable of remembering a four-digit code when shopping.
But what is the real reason? Two words — money and convenience for the banks and card companies.
Implementing a PIN and chip point-of-sale system would cost a little more for credit card companies and banks, but it would add an important security layer to the transaction. Even while they generate record profits on Wall Street to the tune of tens of billions of dollars each quarter, they remain unwilling to invest in the resources necessary to implement modest security measures like requiring a PIN along with chip-enabled cards.
Apparently putting our money and our convenience at risk — something that happens every day that consumers are left unprotected by antiquated card technology like magnetic stripes or cards lacking PIN verification — is not something that concerns the credit card and banking industry.
Even when they are reimbursed, consumers’ lives are upended when fraud occurs as they have to spend their precious time dealing with card companies, navigating frozen accounts, and complying with fraud investigators.
The damage is crippling. With outdated security measures still used to protect against an increasingly sophisticated criminal element, it is only a matter of time before more damage is done to consumers.
It doesn't have to be that way. But it will be unless and until consumers speak up and demand stronger credit card security measures like PIN and chip cards from the financial institutions so eager for their business in the first place.
Read the story at nwitimes.com.