Congress Should Pay More Attention to Payment Security

In the wake of data breaches, congressional conversation should focus on need for chip and PIN.

August 12, 2015

WASHINGTON – A bipartisan group of lawmakers from the House Energy and Commerce Committee are asking the Government Accountability Office to review credit card monitoring services after an investigation found a leading provider made false claims. According to a recent blog post by Debra Berlyn in Roll Call, this raises an important question: “If credit card monitoring may be ineffective at preventing fraud, why aren’t American leaders, including officials in Congress, having a discussion about safeguarding credit cards with two levels of security for payments—chip and PIN?”

In the wake of data breaches at government agencies and several companies, credit monitoring services have increasingly been offered to breach victims to help mitigate any fraudulent activity. While those services may have some merit, the best way to protect consumers from fraud is by strengthening security measures at their most fundamental level: the point-of-sale. Consumer credit card transactions should be much more secure, and could be, but the United States continues to unnecessarily lag behind the rest of the world because credit card companies and banks insist on using a less secure alternative.

In the blog, Berlyn, who is president of Consumer Policy Solutions and director of the Consumer Awareness Project, writes: “For some time, I have advocated for the implementation of chip and PIN technology.  … Should a thief attempt to use a stolen chip and PIN card for an in-store purchase, it would be useless without knowledge of the PIN. Furthermore, we could extend those protections even further if we had more robust mechanisms available to consumers to securely use their PINs during online transactions. The technology certainly exists, it is just not widely used.”

Further, chip and PIN will not only help to reduce fraud, but it also reduces the incentives to perpetrate data breaches in the first place by diminishing the value of the data that could be stolen because of the chip and PIN cards’ two-pronged security measures. Chip and PIN cards have already contributed to dramatic reductions in fraud wherever they have been implemented abroad. Yet, despite the overwhelming body of evidence that demonstrates its effectiveness, the financial services industry has thus far been unwilling to deploy these security measures in the United States.

“Given the increased momentum on Capitol Hill to protect consumers from financial harm, an opportunity exists for the country’s leaders to help provide those protections by championing chip and PIN,” writes Berlyn. “Congress can play an important role by urging the nation’s largest banks and credit card companies to do everything they can to provide American consumers with chip and PIN equipped cards to protect their financial transactions and help reduce fraud.”

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