Monday, June 27, 2005

Identity Theft Consumers, retailers data theft

Consumers, retailers grapple with data theft It appears that the major credit card companies affected by that major data theft from CardSystems Solutions last week are digging in their heels and refusing to notify consumers whether specific accounts were compromised.

Chase, Citigroup and MBNA have all said they'll notify consumers ONLY if those accounts appear to be at risk. Translate that to say they will only notify you once you've lost money and have to cancel your account yourself. This stance is taken simply because retailers are usually the ones to bear the brunt of fraud as consumers only have to claim fraud to get a refund.

Retailers must eat the loss and card issuers stand back and say to those retailers, "You accepted that charge, and you are responsible for the sale to that criminal" So the consumer is refunded only after discovering fraudulent charges - if they are alert enough to notice them - the retailer must absorb the loss and the card issuer passes blame.

This all means that the criminals get away with the fraud and card issuers bear no loss. It also means that cards that were compromised, but issuers don't want to spend the average $30 per card to replace them for consumers.

" If the credit card companies were to replace all 40 million cards that may have been stolen, it might cost more than $1.2 billion." according to the linked story here.

Card issuers are passing the buck here. CardSystems is to blame for the data breach, but card issuers are refusing to protect consumers who hold their cards.

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posted by RealitySEO at 9:32 AM


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