LowCards.com Weekly Credit Card Update–March 28, 2014
Why So Many Retail Stores Get Hacked for Credit Card Data
When a big retailer gets hacked, it’s often quick to note that it has complied with cybersecurity rules set by the credit card industry. MasterCard, Visa and other card companies require retailers to pass an audit sanctioned by the Payment Card Industry (PCI) Security Standards Council, an industry group. It turns out the accreditation by PCI doesn’t always offer much protection against fraud. Large retailers can face fines of $25,000 per month for violating PCI’s guidelines. But there’s nothing to stop companies from quickly undoing changes they made to their systems to appease inspectors. The current PCI standard gives every party in the payment system a credible way to redirect blame for a breach. Story by Jordan Robertson for Bloomberg Businessweek.
Three New Details from Target’s Credit Card Breach
Appearing before the Senate Commerce Committee on Wednesday, Target’s chief financial officer, John Mulligan, provided few groundbreaking revelations about the data breach. But Mulligan’s measured testimony helps illuminate three details about the hack that pilfered credit card data and personal records from the retailer’s computer systems. The amount of fraud on compromised cards has been less than expected so far. The number of affected customers is likely to be no more than 98 million. The company says it is investigating whether it could have prevented damage if it had responded differently. Story by Ben Elgin for Bloomberg Businessweek.
California DMV Probing Possible Breach of Customer Credit Cards
The California Department of Motor Vehicles said Saturday that it is investigating a potential security breach of its credit card processing services, but officials said the agency had no immediate evidence that its computer system had been hacked. The DMV was alerted by law enforcement officials about the possible breach and has “heightened monitoring” of all of its Web traffic and credit card transactions. The agency is also in contact with credit card companies and the vendor who processes its online transactions. Story by Kate Mather and Carla Rivera for the Los Angeles Times.
Your Child’s ID is a Big Target for Identity Thieves
Child identity theft can be a bigger problem than other forms of identity theft because it can go unnoticed for years. A recent Carnegie Mellon study found that 10.2% of children under the age of 18 had someone else using their Social Security number. That percentage is dramatically higher than the 0.2% rate for adults in the study. Crooks are targeting children because the probability of discovering the theft is so low. Children rarely use their Social Security number and parents usually do not monitor the child’s identity. Story by Bill Hardekopf for LowCards.com.
Retail Groups Say Credit Card System Needs Overhaul
The nation’s credit and debit card system is prone to fraud and needs a major overhaul. That was the message the National Retail Federation, the world’s largest retail trade association, brought to the U.S. Senate Wednesday. The federation charged that banks’ insistence on cards that use a signature instead of a Personal Identification Number puts merchants and their customers at risk. The federation said that credit card companies continue to promulgate the use of the fraud-prone signature cards despite 25-year-old research that PIN-based cards provided more security for consumers. Story by Tom Wharton for the Salt Lake Tribune.
Russia Gets Ready for Life Without Visa and MasterCard
Is Russia ready to cut up its plastic? After Visa and MasterCard stopped processing some Russian transactions in response to U.S. sanctions, Moscow says it could launch a homegrown payment system that could be ready in as little as six months, according to German Gref, chief of the country’s largest bank, Sberbank. Hard as it may be for Americans to imagine life without Visa and MasterCard, jettisoning them wouldn’t be all that difficult. Moscow has been preparing for the past few years to issue an electronic payment card that citizens could use for transactions with the government, such as tax and pension payments. Expanding that to include private purchases wouldn’t be hard, says Avivah Litan, an analyst at Gartner Research: “If the banks are all on board, they can use the existing [card-reading] equipment in the retail stores. They’ve been thinking about it for so long, it’s just a matter of flipping the switch.” Story by Carol Matlack and Elizabeth Dexheimer for Bloomberg Businessweek.
Appeals Court Upholds Current Fees on Debit Card Purchases
In the latest chapter of the debit card fee wars, the banks and Federal Reserve were dealt a victory on Friday when a federal appeals court overturned a lower court’s decision. The ruling means that the amount banks collect from retailers when consumers swipe debit cards can remain as is, and not be reduced further. The takeaway message for consumers: Nothing much will change, at least for now. Story by Tara Siegel Bernard for The New York Times.
Don’t Bank on High-Tech Credit Cards
As companies invest more in each EMV card, they’re also extending the card’s life span from the average two or three years until expiration to about five years to save the cost of issuing new cards. Plus, cards that ask consumers to alter their behavior–by adding an additional passcode, for example—have difficulty gaining traction. Geolocation features that sync credit cards with smartphones to make sure they’re in the same place during a transaction have more hope of taking off, because while they add an extra layer of protection they don’t ask consumers to change their behavior. People already carry their smartphones. Story by Priya Anand for MarketWatch.
LowCards.com Weekly Credit Card Rate Report
Based on the 1,000+ cards in the LowCards.com Complete Credit Card Index, the average advertised APR for credit cards is 14.47 percent, identical to last week. Six months ago, the average was 14.38 percent. One year ago, the average was 14.29 percent.