America the Superpower is also the super choice for criminals wanting to steal credit card information. Security experts such as myself warn that this problem will get worse before it improves.
That ancient technology of the magnetic strip on the back of credit and debit cards is a godsend to criminals. The easy-to-copy band stores account information using a technology the same as that of cassette tapes. U.S. credit card technology has not kept up with fraudsters.
This is why the recent Target store breach was so extensive. Companies haven’t wanted to invest in upgrading security due to cost. Credit card companies, banks and retailers want someone else to spring for the costs. For instance, if security is upgraded, banks still expect to retain the profits they got with outdated processing systems.
When a card is swiped, the strip allows communication between the retailer’s bank and the customer’s bank: 1.4 seconds. That’s enough time for the network to record the cardholder’s information on computers controlled by the payment processing companies.
Hackers can snatch account data (including security codes) as it crosses the network or steal it from databases. Though the security code is required for most online purchases, thieves don’t care as long as the magnetic strips are easily reproducible and placed on fake cards-which they then use for purchases or sell online. Three bucks will get you a fraudulent card with limited customer information and a low balance.
You’ll have to wait till fall of 2015 for U.S. credit card companies to ditch the magnetic strips for digital chips. Retailers want more: each transaction to require a PIN rather than signature.
What can retailers do in the meantime?
- Internet-based payment systems should be protected from hackers with strong firewalls.
- Data should be encrypted, so that hackers see gibberish.
This may be easier said than done, because implementing these safeguards isn’t cheap. The U.S. lags behind most other nations when it comes to credit and debit cards; most countries’ cards use the digital chips that contain account information.
Every time the card is used, the chip generates a code that’s unique. This makes it a lot harder for criminals to duplicate the cards-so difficult, in fact, that usually they don’t even bother trying to replicate them. It would really be great if the U.S. could catch on to this technology.
- Call one of these three credit reporting agencies to put a fraud alert out on your credit report:
Experian: 888-397-3742; Equifax: 800-525-6285; TransUnion: 800-680-7289
Contact only one company because they’re legally required to contact the other two.
- Contact local law enforcement, banks and credit card companies if you suspect ID theft.
- Call the FTC ID theft hotline: 877-438-4338; or online at www.consumer.gov/idtheft
Medicare Card Scams
The weak link in Medicare is that the SSN can be used as the identifying information on the insurance cards.
- After the first visit to a doctor, copy your Medicare card, ink out the last four numbers of the SSN, then use the copy for subsequent visits.
- A Medicare representative will never call you to verify information so that medical bills can be paid. A call like this is a scam.
- If somebody other than your physician asks for Medicare information, call 1-800-MEDICARE to report this. Only when you’re in your doctor’s office should your doctor request such information. If in doubt, never give your Medicare number out.