The Solution is Available Now!

Hi Everyone,

It started happening last November, but the realization of the enormity of what actually took place, took a  while to figure out. There is an excellent article in the February 10th issue of Time Magazine, that is all about this big problem that is just getting bigger and bigger. What am I talking about? I am talking about the hackers who were able to steal from 100 million Target customers, who used a credit card; their account numbers, names, email addresses and other info. Then the same thing unfortunately happened to customers at Neiman Marcus and Michaels stores.

How did this security breach into big businesses occur and could it have been prevented? The answers are simple and yes. Once the hackers got into their computer systems, they downloaded malware which enabled them to receive the data from each card swipe from the store's point of sales, (checkout registers). They were also able to get the info in real time. FYI, in all these cases, it didn't matter whether the customers used a credit or debit card. Any and all info was still stolen.

But could these hacking's have been prevented? How? Again, the answer is simple. Some European banks have already switched from using magstripe cards, which are used in this country, to chip and PIN cards. The difference between the two? Magstripe cards is 40 year old technology and have 3 lines of info: the first and the third lines are used by the bank or card issuer. Your vital info is on the second line. The malware specifically looks for this second line and captures all that info. Whereas the chip and PIN cards makes counterfeits and skimming impossible. When you swipe the card, your personal info is encrypted via the chip. The card also contains a pin number that the purchaser must enter correctly at each and every transaction or the transaction gets rejected. Seems so simple, so why don't we have them in this country?

Of course, money is the reason these new chip and PIN cards are not being used here. The cost of a magstripe card is $1 and the cost for chip and PIN card is $3. The U.S. has approximately 5 billion magstripe credit and debit cards. Multiply the two of them and the replacement cost is around $15 billion. That is a whole lot of greenbacks. Then there is also the cost to businesses to have the point of sales technology to accept the new cards. But finally, let's not forget about credit and debit card fraud. They say that there is approximately $12.4 billion in card fraud on a global basis in 2013. With 44% of that in the U.S., American credit card fraud amounts to about $5.5 billion per year. You can see where this is going...... card issuers have figured out that it is still cheaper to pay off the yearly losses due to fraud, than to pay for the new cards.

Side B of this whole problem is not about card issuers losses, but the losses of the card issuers customers who have had and will, in the future, have their identities stolen. The stress and strain of trying to fix your identity and get your credit score repaired, which may take years to fix, is a terrible fate that the card issuers have bestowed on everyone affected; all because of the amount of money it would cost to replace all of their outdated cards.

Where is the common sense for paying off card fraud every year, year after year, instead of replacing the old tech with new tech and let it pay for itself from the savings from not having to pay off the fraud? Well, app-equipped smart phones and digital wallets use this new tech and are now taking a bite out of the card issuers bottom line. Serves them right.

Til next week.

Peter