MasterCard migrating to chip-based cards to combat fraud
By Eva Laureano
For News is my Business
Starting in February 2013, MasterCard will start migrating Puerto Rico consumers to using credit cards with chips instead of magnetic strips to reduce fraud and identify theft.
Businesses that do not have the equipment in place to accept credit cards with chips will be held accountable for the money lost by a customer who is a victim of fraud or identity theft, said Jack Sinnott, business leader for customer security and risk services in the Latin American region for MasterCard Worldwide.
Sinnott made his announcement during a workshop titled “Welcome to the Digital Era: Is Your Business Prepared for It?” sponsored by Oriental Bank. During the seminar, four speakers talked about how businesses can prevent fraud, cyber fraud and corporate account takeovers.
In his presentation, Sinnott spoke about how MasterCard can help financial institutions and merchants achieve fraud and risk management objectives. He said that as an industry leader, MasterCard has been able to support the implementation of strong authentication technology and develop industry standards for the electronic payment system.
The new chip technology will make it more difficult for thieves to steal personal information, he said.
“Instead of a magnetic strip, the card has a chip embedded in the front. The data on the chip is very difficult to copy. Instead of signing, users will have a personal identification number,” he said.
While Sinnott said during his presentation that his company is trying to create electronic payment standard as more people leave behind their checkbooks in favor of electronic transactions, Andrew R. Bland, senior vice president and chief security officer of Corporate Security Group for Harland Clarke Holdings Corp., said his company processes 640,000 check units per day.
“Checks are here to stay in the foreseeable future,” he said.
Bland said his company, which specializes in helping businesses avoid check fraud, has developed checks that contain security features that provide the highest level of security. These include features that cannot be photocopied or scanned.
“Anyone trying to alter a check using a chemical, will not be able to do so because it will turn to mush,” he said, adding they also have a patented intricate design that is very difficult to duplicate.
During the seminar, Tim Mills, vice president and account executive for customer relationship management at The Clearing House, said criminal entities are employing various methods to obtain access to legitimate banking credentials from businesses.
“They mimic web bank websites, utilize malware and viruses to compromise a business system and use social engineering to defraud employees into revealing security credentials,” he said.
Some examples of ways a business’ systems may be compromised include the use of infected documents attached to an email; a link within an email that connects to an infectious website; employees visiting legitimate websites and clicking on infected documents and an employee using a flash drive that has been infected.
“Fraudsters then exploit the infected system to obtain security credentials that they can use to access a company’s business accounts,” he said.
He urged businesses to use firewalls, security suites and anti-malware and antispyware on all computers and dedicate one computer exclusively for online banking and cash management.
Meanwhile Bradley D. Rex, a supervising special agent for the FBI San Juan Cyber Squad, said fraudsters use techniques such as phishing and pharming to defraud businesses. Through phishing, a person sends thousands of emails that appear to be legitimate to steal private information. Pharming entails the use of a bad code sent to a computer that directs a user to an illegal website.
He warned seminar participants of a virus called Zeus Botnet that steals banking information and has spread worldwide.
“Only 23 percent of anti-virus can detect it,” he said, urging business to work closely with law enforcement to protect their systems.