Saturday, August 8, 2009

Online Banking will Contribute to Growth of Credit Card Fraud - Report

Law enforcement group expects credit card fraud to grow

According to the 2009 Report on Organized Crime in Canada, the switch to Chip and PIN will have no impact on eCommerce credit/debit card fraud...(Don't Type...Swipe!)

...chiptechnology has no impact on the security of credit cards when used topurchase items online, by mail order or by phone.

The increasing popularity of online banking will likely lead to an increase in credit and debit card fraud, says a new report from a group of law enforcement agencies.

In the 2009 Report on Organized Crime in Canada, released Friday in Charlottetown, Criminal Intelligence Service Canada outlines the state of organized criminal activity in Canada, from street gangs to global networks.

While officials said overall organized crime appeared to be neither growing nor shrinking, CISC expects to see more credit and debit card fraud in the future.

"The ease with which payment card fraud can be undertaken and the profitability of this activity make it an attractive market for both opportunists and organized crime groups," says the report.
Hackers are targeting online sites and using various methods to steal credit card information. With more internet banking, this criminal activity is likely to become more lucrative, and more common, the report concludes...

(click the picture on the right to enlarge and read)

Continue Reading 

Excerpt from the Report:

Credit card fraud and Interac statistics provided by the Canadian Bankers Association shows combined annual losses due to debit and credit card fraud in Canada exceeded $500 million in 2008. Recorded losses from debit card fraud in Canada decreased slightly from losses in the previous year, while those from credit card fraud increased. The bulk of credit card fraud losses are attributed to counterfeiting and fraudulent purchases, suggesting an increase in organized criminal operations.

Currently, hackers are targeting online sites and using malware and keystroke-logger programs to steal credit card data in order to bypass the need for skimming activity. This trend is likely to increase as online banking continues to grow in popularity.  

A transition from magnetic stripe debit and credit cards to ones embedded with

microchip technology is currently underway in Canada; however, a complete implementation of the technology is expected to take several years.   Furthermore, chip technology has no impact on the security of credit cards when used to purchase items online, by mail order or by phone.

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There's a Skill to Making Online Gambling Legal - IPAGOS

I was relatively amused by an article published in eWeek yesterday, entitled: "Senator Deals New Online Poker Bill."

I learned that "the luck of the draw" has been re-categorized into a "a game of skill."   At least that is the new mantra being pushed by Sen. Robert Menendez (D-NJ) in his new "IPAGOS" (Internet Poker and Games of Skill) bill.

Apparently the difference between "Internet Poker" and "Sports Wagering" is skill.  And I've got the perfect example as to why...  

What else would explain the a skillful art behind deciding to keep two kings and henceforth "drawing" three beat the three kings you didn't know your opponent had! 

At the end of the day, they can spin it however they want...but the very fact that there are now (last time I counted) "53 co-sponsors" to Barney Frank's initial bill suggests that this Internet gambling thing is going to be re-legalized.  The government needs the billions it will bring in and U.S. bettors drive 50% of the $16 billion Internet gambling industry anyway. 

Personally, I don't gamble, (except entrepreneurally)  So why do I even bother to cover this and how is it related to the payments industry? 

The 2006 Unlawful Internet Gambling Enforcement Act, prohibits financial institutions from accepting payments from credit cards, checks or electronic fund transfers to settle online wagers.  Which means it also prohibits a "real-time" AML/KYC compliant bank card to bank card payment transfer application as well. 

Here's some excerpts.
Online poker advocates upped the legislative ante Aug. 6 with the introduction of a bill in the U.S. Senate that would legalize online poker and other "games of skill."  

The Internet Poker and Games of Skill Regulation, Protection and Enforcement Act  (that's "IPAGOS" for short) would provide a U.S. licensing, regulatory and taxation framework to establish a legitimate American online skill game industry. The legislation would impose further enforcement against individuals and financial entities that accept illegal Internet gambling proceeds.

Despite the ban, Americans continue to gamble online with estimates showing that at least half the $16 billion Internet overseas gambling industry is driven by U.S. bettors. Since the 2006 law was approved, Internet poker players have contended that poker is a game of skill and should not be lumped in with other forms of online gambling such as sports wagering.  

Bill sponsor Sen. Robert Menendez (D-NJ) estimates that more than $3 billion in annual revenue can be raised by licensing and regulating Internet poker.

"Pulling Internet poker out of the shadows and into the light of the law, we have the opportunity to help our economy while protecting our families. By bringing "these games of skill into the mainstream", we can generate billions in revenue for businesses and the Treasury during these tough times," Menendez said in a statement.

Read the article in it's entirety at eWeek

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