Retailers Propose Data Security Changes to Congress... - Legal News


ADVERTISING DISCLOSURE: is an independent, advertising-supported web site. receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Legal » Retailers Propose Data Security Changes to Congress to Protect Customers from Fraud

Retailers Propose Data Security Changes to Congress to Protect Customers from Fraud

Retailers Propose Data Security Changes to Congress to Protect Customers from Fraud
The content is accurate at the time of publication and is subject to change.

Retailers have enough problems these days just to maintain profits in a weak economy. But data breaches like the massive one at Target have caused the largest retail trade association to pitch Congress with recommendations on how best to stem the plague of fraud by moving to smart technologies that can reduce cybercrime, data theft and consumer fraud.

Mandatory Chip and PIN Cards

“We need PIN-authentication of cardholders regardless of the chip technology used on newly issued cards,” wrote Mallory Duncan, SVP and general counsel of the National Retail Federation (NRF), in a letter to the House Financial Services Committee’s Subcommittee on Financial Institutions and Consumer Credit.

“We also need chip cards that use open standards and allow for competition among payment networks as we move into a world of growing mobile commerce,” she added.

For years NRF has called for mandatory use of cards that have both a chip and require a PIN number. Such cards are widely used in Europe, but the card industry here has not upgraded to this technology. Instead they would prefer to issue cards that have a chip but could be used with either a PIN or signature, defeating a vital security provision.

A New Age of Cybercrime

According to the NRF, with credit and debit cards serving as a de facto currency in today’s world, cyber-savvy criminals find it more efficient to hack into computer databases to steal consumers’ names and card numbers than to rob a bank for cash.

The biggest reason card information can be stolen is the U.S. credit card industry and issuing banks still use 1960s technology that criminals can easily breach.

Retailers end up with the lion’s share of headlines about data breaches because they are names consumers know, despite the fact that a recent Verizon study shows retailers account for less than a quarter of all such incidents. Financial institutions account for one third, while U.S. government agencies experience 60 breaches per day.

The NRF also asserts that PIN and chip technology is not the only answer. In 2007 NRF asked that retailers be allowed to keep only an approval code for each transaction, with banks retaining all consumer data that could be used to commit fraud.

Seven years later, the card industry has yet to make the change, leaving sensitive consumer financial data vulnerable because retailers still must retain it to respond to customer complaints of disputed charges.

Seeking Passage of Legislation

The NRF is also seeking passage of federal laws making it easier to share information about data crimes to ensure thorough investigation and prosecution. The NRF would like to see a uniform federal data breach notification law to replace separate laws in 46 states and the District of Columbia.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:

Related News:

MasterCard Steps Up Fraud and ID Theft Prevention
MasterCard Steps Up Fraud and ID Theft Prevention

Posted: June 17, 2014

In the face of several recent major data breaches and increasing consumer concern about payment security, MasterCard is putting in place new measures to protect cardholders. Continue reading

8 in 10 People Took No Action After Target Breach
8 in 10 People Took No Action After Target Breach

Posted: June 09, 2014

Following a major leak of consumer payment information that compromised 40 million credit and debit cards across the country, most people did nothing to protect themselves against credit card fraud. Continue reading

More Than Half of Consumers Fear Credit Card Data Theft
More Than Half of Consumers Fear Credit Card Data Theft

Posted: November 10, 2014

A recent survey reveals that many people are going into the holiday season worrying about more than just what to get their mother-in-law for Christmas. Continue reading

Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, and more up to the quarterly maximum, each time you activate.
For Excellent, Good Credit
INTRO OFFER: Discover will match ALL the Miles you've earned at the end of your first year, automatically. For example, if you earn 30,000 Miles, you get 60,000 Miles. That's $600 towards travel!
For Excellent, Good Credit
Earn unlimited 1.5% cash back on every purchase, every day
For Average, Fair, Limited Credit
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!