From the Spurious Correlations Department: Rising Card Fraud Tied to RFID Chips

by Mercator Advisory Group 0

Citing data the company says was released to it pursuant to a FOIA request, e-pickpocketing solution vendor Identity Stronghold announced today that there is a correlation between a rise in credit card fraud associated with identity theft and the growing issuance of contactless payment cards. Under FOIA, Identity Stronghold petitioned the Bureau of Justice Statistics (BJS) to release the card fraud data, which the Bureau collected under its National Crime Victimization Survey (NCVS). Identity Stronghold’s announcement indicated that the company found that there was a 31% increase in “cases of credit card theft” and a 37% rise in “the number of households victimized by more than one type of identity theft.” Though the period over which these percentages apply is unclear in the press release, the announcement goes on to say that BJS responded to the FOIA request from Identity Stronghold with “statistics only between the years 2005 and 2007.”

Worthy of note is BJS’s latest report in its Identity Theft Series, which publishes statistics collected in the NCVS through 2010 and can be found on the Bureau’s website.

PaymentsJournal proposes that a more rational correlation exists between data breaches and credit card fraud.

Excerpts from the (rather egregious) Identity Stronghold announcement:

[T]he increase in credit and debit card theft correlates with the introduction of Radio Frequency Identification (RFID) chipped credit and debit cards in 2005 and the subsequent increased rate of issuance. We predict any new data collected by the DOJ will reflect that the rate of credit card theft has increased at the same rate as the issuance of these new cards.

“The DOJ is behind the power-curve of keeping current data on credit card-related identity theft and financial crimes. Couple this with credit card companies misleading cardholders about the security of their personal identification, and it’s the ‘Wild West’ out there,” said Identity Stronghold CEO and founder Walt Augustinowicz.

By 2016, a projected one billion RFID-enabled credit and debit cards susceptible to electronic pickpocketing will be issued to cardholders, creating a target-rich environment for identity thieves setting their sights on consumer’s back pockets.

“I understand why credit card companies downplay the risks their products pose to cardholders and the boon they present to electronic pickpockets,” said Augustinowicz, “but I’m baffled by the idea that federal law enforcement agencies can take a more than 30-percent spike in credit card information thefts as their cue to stop collecting data and making current statistics available.”

“Meanwhile, new smartphone technology allows electronic pickpockets to scan and steal your credit card information simply by getting their phone close to your purse or wallet,” added Augustinowicz. “I’ll be working with local law enforcement agencies throughout 2012 to provide them with information and training on RFID security, electronic pickpocketing and how to educate citizens of this growing threat.”

Click here to read more.