NRF: Self-Swipe Boosting Fraud Risk

Written by Evan Schuman
February 29th, 2008

When retailers started making card-swipes a customer function, it saved a few seconds of a cashier’s time. But are retailers paying for that efficiency boost with a higher risk for fraud? The head of the National Retail Federation’s fraud prevention effort says yes.

For decades, cashiers have supposedly followed security procedures where the card is examined, the card signature matched to the customer’s signature and additional identification is sometimes sought, said Joe LaRocca, the NRF VP for loss prevention.

"In today’s environment, the card is swiped by a consumer and it’s never seen by the cashier. There’s no way to see the information on the plastic," he said, and therefore no way to verify identity.

Is LaRocca suggesting to turn the swipes back around for the cashier? No, but he does asks for more generic vigilance. "As we continue to move away from these fraud prevention activities, we do need to be mindful that we’re pulling back on the security levels," he said.

Other LaRocca examples of security dilutions: Not enough retailers are watching for giftcard balance inquiries on giftcards that have yet to be sold. "When that number keeps coming through every hour for several days, you have to question ‘Who is checking that balance?’"

He also expressed concerns about a lackadaisical attitude toward investigating chargebacks. "The chargeback is processed through the bank and it’s almost always along the lines of being summarily dismissed as being a fraud," LaRocca said. "It’s simply not often that someone is going back and aggressively pursuing these issues."

He also references a gas station chain that put in a touchless pay system, only to have to disable it when the fraud rate soared. The reactivated version required customers to give a Zip Code as verification.

LaRocca is hoping to address these issues through a series of regional NRF-Investigator’s Network Meetings in March and April in the areas around New York City, Boston, San Francisco, Chicago, Seattle and Miami.


One Comment | Read NRF: Self-Swipe Boosting Fraud Risk

  1. Daniel Beaudoin Says:

    I have lived 14 years in France and there, you do not sign for your bank card purchase, you enter your pin on a key pad protected from prying eyes. Wouldn’t be a good idea to do the same here in the States? When I do my grocery, I use my debit card and enter my pin but I always have to protect the reader when entering the numbers because every one can see what I am entering. If we could also have pin usage with credit cards, it would probably reduce the number of frauds in the retail system.


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