[privacy] NY Sen. Schumer warns of no-swipe cards

["Richard M. Smith" <rms () computerbytesman com>]

http://www.businessweek.com/ap/financialnews/D8LPMID00.htm

NY Sen. Schumer warns of no-swipe cards


By KAREN MATTHEWS

No-swipe credit cards that use radio waves to relay their data put consumers
at increased risk of identity theft, Sen. Charles Schumer said Sunday.

"These cards may be convenient, but they're a double-edged sword," said
Schumer, D-N.Y.

Tens of millions of no-swipe credit cards have been issued in the past year.
When a customer uses the credit card to make a purchase, the card is
processed by a radio frequency identification reader operated by the
retailer.

Schumer said thieves can equip themselves with the radio frequency readers
to steal information from the credit cards, which are being marketed heavily
as time savers.

"All you need to be is within a couple of feet of the customer," Schumer
said. "You may as well put your credit card information on a big sign on
your back."

But JPMorgan Chase & Co., the nation's second-largest financial services
provider and its premier credit card issuer, has maintained the no-swipe
method provides the same level of security as the traditional swiping
method, which involves reading a magnetic strip on the back of the card. The
cards use encrypted data, it said.

"The card and the reader in the terminal are safe and secure, and the
transaction is handled the same way that credit cards are managed today,"
Thomas O'Donnell, senior vice president of Chase cards services, said when
the company announced the launch of its blink cards last year.

Schumer, who held a news conference on a busy Manhattan street corner Sunday
amid holiday shoppers, called for regulations to require higher encryption
standards that would make the cards more secure.

In addition, Schumer said contracts for the no-swipe credit cards should
have warning boxes disclosing "the known weaknesses of the technology."

"Holiday shoppers need to be extremely careful with their credit cards," he
said, "and these companies need to step up their efforts to protect people
from identity theft."

A telephone call to Visa International Inc., the nation's largest credit
card brand, wasn't immediately returned.

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