Says technology upgrade would reduce fraud
By Paula Katinas
Brooklyn Daily Eagle
In the wake of the security breach at Target, in which hackers got their hands on credit card information belonging to millions of the chain store’s customers, lawmakers across the country are working on legislation to try to cut down on credit card fraud.
New York State should move forward with new technology that would reduce the chances of credit card fraud and identity theft, according to state Sen. Marty Golden, who is sponsoring legislation that would require all new credit and debit cards issued to New Yorkers to be equipped with a smart chip starting Jan. 1, 2015.
The chip, which would be embedded in each credit and debit card, would replace the magnetic stripe currently located on the back of the card.
Golden (R-C-Bay Ridge-southeast Brooklyn), a member of the senate Banks Committee, said it’s time to replace the strip with the chip.
“This legislation would require smart chip technology to be incorporated in our debit and credit cards to help protect against identity theft,” said Golden, who held a press conference on 86th Street in Bay Ridge on March 21 to tout the proposed legislation.
Proponents of the smart chips say the chips are a safer bet that the magnetic stripe cards because they store encrypted account information that cannot be read by swiping. The cards would be scanned into a terminal that would read the chip. A PIN number would be required to decrypt the chip’s information.
“Believe it or not, most New Yorkers have credit cards that still rely on the magnetic stripe, a technology developed in the 1960’s, which lags far behind the chip in terms of security. As the criminals work to out-smart us, we must create new laws to protect our shoppers and our
stores,” Golden said.
Bob Howe, president of the Merchants of Third Avenue, a group representing 300 store owners on the avenue, said he supports Golden’s bill. “It will protect customers and merchants alike,” Howe told the Brooklyn Eagle. “Ten years ago, credit card fraud was considered the cost of doing business. It wasn’t that big a problem. Now, it’s a question of whether you can stay in business. If a merchant gets hacked and their customer’s information is stolen, the merchant loses that customer forever. Are you going to go back to a store where your credit card information was stolen? Credit card fraud can ruin a business."
It’s not just big stores like Target that are being hacked, Golden said. “Over the past few weeks, my district has been targeted by hackers who have been able to break through the security walls of some local stores. The false charges reported to my office have been made in Brooklyn, Long Island, Connecticut and even Puerto Rico,” he said.
According to the federal Bureau of Justice Statistics, an estimated 16.6 million people experienced at least one incident of identity theft in 2012-2013 and 15.3 million of the incidents involved fraud with debit or credit cards.
Canada adopted the chip technology in 2009 and since that time, debit card fraud in that country has dropped by 45 percent, Golden said.
Many countries around the world also have the smart chip. “My son traveled to China to study and he told me, ‘Dad, I need a credit card with a smart chip.’ I had a hard time convincing the banks to do it. Most of them turned us down,” Howe said.
Nerdwallet.com reported that American companies have so far been slow to adopt the new technology because of the high cost of replacing old systems. New cards would have to be issued and all computers and ATMs would have to be upgraded to accommodate the smart chip.