During an event at the Consumer Financial Protection Bureau, President Obama signed an executive order today aimed at reducing cyberfraud and identity theft. The US government will launch the BuySecure initiative to improve payment security by encouraging the adoption of EMV chip-and-PIN systems at merchant terminals and by enhancing information sharing among consumers and stakeholders in cases of cyberfraud and identity theft.
More than 100 million Americans have lost personal information in a data breach over the last year, and identity theft is the fastest growing crime in the US, the president said.
[For more on data breaches, check out: What Banks Can Learn from the Target Breach.]
"The idea that someone halfway around the world could run up thousands of dollars of charges in your name just because they stole your number, or you swiped your card at the wrong place, at the wrong time, that's infuriating," he said.
The president endorsed the US move to EMV chip-and-PIN card technology, citing the drop in fraud in card-present transactions that other countries have seen after adopting the technology. "We know this technology works -- when the UK switched to a chip-and-PIN system, they cut fraud in stores by 70%."
As part of the BuySecure intiative that the president signed into action, the federal government will begin installing chip-and-PIN compatible payments terminals at government locations that accept consumer payments, such as passport offices and national parks. The government will also start issuing chip-and-PIN cards next year for programs like SmartPay and Direct Express.
The president also urged retailers and issuers to adopt EMV chip-and-PIN technology. He commended several private companies for their efforts to adopt the technology and educate consumers about its use and benefits. A group of US retailers, including Home Depot, Target, Walmart, and Walgreens, have pledged to adopt the technology at more than 15,000 store locations by the beginning of next year, the president said. American Express has promised to launch a $10 million program in January to help small businesses adopt chip-and-PIN terminals. And Visa is launching a $20 million campaign to educate consumers about chip-and-PIN technology after conducting a survey that found that 48% of consumers are not aware of it.
One of the fastest ways for consumers to find out if their identity has been stolen is by monitoring their credit reports, the president said. The executive order stated that the Federal Trade Commission will streamline resources and information to help consumers resolve cases of identity theft at a new website, identitytheft.gov. Federal agencies will work to improve information sharing on fraud cases with the goal of halving the average amount of time it takes to remediate an identity theft case in the next two years.
Private companies also pledged to help consumers monitor their credit scores to detect fraud and identity theft cases. Citigroup said that it will partner with FICO to deliver free credit score reports to its credit card customers beginning in January. And MasterCard said it will provide free 24/7 identity theft monitoring and resolution services for all its cardholders.
The president also announced that the White House would host a cyber security summit this year that will bring together industry players to discuss best practices and next-generation technologies like mobile payments.
Payment players and industry groups seemed to welcome the government's support for the migration to EMV technology. "Today's announcement should serve as a catalyst for widespread adoption of chip and PIN card security," Sandy Kennedy, president of the Retail Industry Leaders Association, said in a press release. "Every American cardholder deserves the highest level of security available today. The antiquated card security system in place today in the US makes it far too easy for criminals to commit card fraud."
Others said that, even though EMV adoption would be a positive step forward, other measures need to be taken to protect consumers against today's sophisticated cybercriminals.
"While chip-based technology is important, it's not a total solution to the issue of data security," Richard Hunt, president and CEO of the Consumer Bankers Association, said in a press release. "Many financial institutions and retailers already have a plan in place to adopt its use -- in addition to our own industry's stringent federal data security requirements. Other technologies are emerging to address online and mobile payments fraud, such as tokenization, which is being spearheaded by financial institutions and card networks in their effort to protect consumers."
Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio