01 January, 2003
category: Biometrics, Contactless, Education
Hypercom Corporation Announces: Inside Job At Credit Bureau Is Latest In Multi-Billion Dollar Credit Rip-Offs
ID Theft, Credit Card Skimming, Stolen Cards Cost $4 + Billion Annually
New Technologies Ready To Roll To Combat Card Criminals: Industry Must Move Faster
The $2.7 million + loss resulting from the ID theft credit fraud at a New York-based credit bureau is only part of a huge and alarmingly escalating crime of card fraud now topping $4 billion annually in the U.S. alone.
ID theft, credit card skimming, stolen credit cards and related problems cost every merchant and consumer in the form of added costs and losses. New technologies developed by Hypercom Corporation (NYSE:HYC) and others in the industry are now available to combat this costly criminal activity.
“The need to bring credit fraud under control, and indeed, eradicate it, demands that the industry take urgent and positive action now,” said Chris Alexander, Chairman and CEO, Hypercom Corporation. New Technologies To Combat & Reduce Credit Fraud
ID theft and credit card fraud can be significantly reduced with two new technologies developed by Hypercom.
Taking the lead in attacking credit card skimming, Hypercom, the electronic payment leader, and a growing number of US-based merchant processors are deploying high-performance, touch screen Hypercom(R) ICE(TM) card payment terminals that are consumer-activated, ensuring that the card never leaves the consumer’s possession. This prevents the most common form of skimming, where a card is electronically copied by a crooked employee. In addition, all new Hypercom terminals are made tamper-resistant through various intrusion detectors that deny access to the internal circuitry of the terminal and prevent new forms of skimming where terminals are “bugged.”
To take protection to a much higher level, Hypercom has developed a finger-based identity authentication system that can be easily added to any existing Hypercom terminal and processing system. The system, developed by Hypercom’s Secure Systems and Transaction Group, which supplies the Government’s security and transaction market, employs a low cost finger-scanning pad connected to the point-of-sale terminal, which is used to create a digital vector from the image of the fingerprint. The vector is a 256-byte value which, when coupled with the card number, provides an extremely reliable and foolproof method of identity verification. Most importantly: nobody gets ‘fingerprinted.’ The vector generation process is one-way. In other words, it is not possible to re-create the fingerprint from the vector. Fingerprint images are never transmitted from the point-of-sale or point-of-transaction, nor are they stored in a database. Additionally, because card numbers are one-way encrypted, the system can be used only for ID verification – never for identification.
“The ultimate objective of the card industry is to prove that the cardholder is who he or she claims to be. Magnetic stripe cards don’t prove that. They simply prove that the person in the store has a card with the correct data on it – which could easily be a copy – or in the case of a remote transaction, knows the card number. Smart cards, although very secure as devices, don’t prove identity either. They only prove that the person has the right card. Smart cards combined with a PIN come closer to positive proof, but they still fall short because of identity theft, carelessness in recording PIN numbers, or coercion to reveal the PIN. The fingerprint-derived ID is a very powerful proof of identity as it uses an intrinsic part of a human being, which can not be stolen or lost,” Alexander said.
ID Theft, Credit Card Skimming, Stolen Cards = $4 Billion + In Fraud Each Year
ID theft is the acquisition of one’s personal identification and financial data for the purpose of assuming the identity to steal money by draining bank accounts, using existing credit and creating new credit accounts.
Credit card skimming fraud takes many forms, but most often involves a cardholder turning over physical possession of his or her card to a retail or restaurant employee, who then swipes the card through a small, illegal card reader, called a “skimmer.” The skimmer copies the data encoded on the card’s magnetic stripe. This information is then used to manufacture counterfeit cards that are used to rack up illegal charges. Stolen cards from mailboxes, pick pockets, auto break-ins, etc., are used by criminals to make unauthorized purchases before the real holder of the card discovers the fraudulent purchases.
Industry Must Move Faster
“We have the technology to stop this criminal activity in its tracks, but we cannot do it alone. Issuers, acquirers, terminal vendors, merchants and consumers must cooperate and adopt the tools necessary to eradicate this destructive activity,” Alexander said.
About Hypercom (www.hypercom.com)
Hypercom Corporation (NYSE:HYC) is a leading global provider of electronic payment solutions that add value at the point-of-sale for consumers, merchants and acquirers, and yield increased profitability for its customers. Hypercom’s products include secure web-enabled information and transaction terminals that work seamlessly with its networking equipment and software applications for e-commerce, m-commerce, smart cards and traditional payment applications. Hypercom’s widely-accepted ePOS-infocommerce(R) (epic(TM)) framework of consumer-activated, EMV-certified, touch-screen ICE (Interactive Consumer Environment) information and transaction terminals enable acquirers and merchants to decrease costs, increase revenues and improve customer retention.
Headquartered in Phoenix, Arizona, Hypercom maintains an installed base of more than 5 million terminals in over 100 countries, which conduct over 10 billion transactions annually.
NOTE TO EDITORS: Hypercom CEO Chris Alexander is available to talk about the huge problem of credit card fraud and the steps that can be taken to eradicate it. Phone: 602/504-5383.
Hypercom and ePOS-infocommerce are registered trademarks of Hypercom Corporation. ICE and epic are trademarks of Hypercom Corporation. All other products or services mentioned in this document are trademarks, service marks, registered trademarks or registered service marks of their respective owners. Certain matters discussed within this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although management of Hypercom believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from expectations include industry, competitive and technological changes; risks associated with international operations and foreign currency fluctuations; the composition, timing and size of orders from and shipments to major customers; inventory obsolescence; market acceptance of new products and other risks detailed from time to time in Hypercom’s SEC reports, including the company’s most recent 10K and subsequent 10Qs.
CONTACT: Hypercom Corporation
Pete Schuddekopf, 602/504-5383
[email protected] URL: http://www.businesswire.com
