The Many Faces of Financial Fraud CSO Magazine (11/13) Vol. 12, No. 9, P. 26 Radcliff, Deb Improvements in payment protections and security practices are beginning to shift the liability for financial fraud onto the least-secure party involved in the transaction. As protections improve, they become reasonable security practices under the Uniform Commercial Code. Organizations that use reasonable security practices are more likely to be shielded from legal liability if they become victims of Automated Clearing House (ACH) fraud, says Doug Johnson, the vice president and senior adviser of risk management and policy at the American Bankers Association. Card fraud in the U.S. has been growing over the last few years, according to Smart Card Alliance Executive Director Randy Vanderhoof, who notes that this is due to the fact that the cards used in the U.S. feature a magnetic strip where all pertinent data for the transaction is static and accessible, meaning it can be used to make new cards. By contrast, he notes, the chip-based EMV (EuroPay, MasterCard and Visa) smart cards used in Europe and elsewhere, which securely store data and prevent it from being reused, have lead to a reduction in card fraud. Meanwhile, card-present payment systems are becoming more secure, leading to an increase in fraudulent card-not-present transactions. Experts say that will push the financial industry to standardize identity and authentication methods, particularly for online transactions. Overall, improvements made to protect all forms of payment fraud have lead to a reduction in fraud and fewer large-scale breaches of financial organizations.
Posted on: Tue, 12 Nov 2013 20:40:05 +0000
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