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RAPAPORT... Overhauling the fraud-prone U.S. credit and debit card system through the use of a personal identification number (PIN) is long over due, according to the National Retail Federation (NRF). The trade group told a Senate hearing today that banks insist on signatures and in so doing have continued to promulgate the use of credit card fraud. “Everything a fraudster needs is right there on the card,” said NRF's senior vice president and general counsel, Mallory Duncan. “The bottom line is that cards are poorly designed and fraud-prone products that the system has allowed to continue to proliferate.” Duncan submitted comments on behalf of the retail trade to the Senate Committee on Commerce, Science and Transportation, which is holding a hearing on criminal cyber attacks that breached consumer card numbers and other data. He said current magnetic stripe cards with signatures are too easy to duplicate and forge. “There are technologies available that could reduce fraud,” Duncan said, adding the system could first easily be overhauled by implementing the use of PINs. The NRF has long advocated for replacing current bank cards with a next-generation that would require use of a PIN, even with or without the an embedded microchip.
“Protecting all cards with a PIN instead of a signature is the single most important fraud protection step that could be taken quickly,” Duncan said. “It’s proven, it’s effective, and it’s relatively easily implementable. PIN debit cards are close to ubiquitous worldwide and readily producible in the U.S. Chip is a desirable add-on. If speed of implementation is of importance, then substituting PIN for signature is preferable to implementing chip.” Along with switching to more-secure, PIN-based cards, NRF supports additional steps aimed at preventing fraud and data breaches, including end-to-end encryption of data, tokenization rather than storing data and mobile payments.
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