U.S. Senator Vows To Crack Down On Contactless Payment

Written by Evan Schuman
December 12th, 2006

U.S. Sen. Charles Schumer is formally petitioning the Federal Reserve to crack down on contactless payment, requiring consumers to be warned about privacy risks and preventing retailers from offering incentives for the cards to be tried.

?If you are using a no?swipe credit card, when you put your card in your back pocket or in your pocketbook, you might as well print your credit card number across your back,? Schumer said. ?Holiday shoppers need to be extremely careful with their credit cards, and these companies need to step up their efforts to protect people from identity theft.?

This isn’t the first time the prominent New York politician has used the holiday backdrop to rally against perceived retail abuses of technology. Two years ago, the senator called a New York City news conference to promise to introduce legislation forbidding retailers from blacklisting consumers who returned too many products. The concern was software that allowed retailers to track consumers who engaged in what the system viewed as excessive?and potentially fraudulent?returns.

But although Schumer had pledged to introduce the legislation after the holiday break, he never introduced it and no explanation was ever given.

The contactless payment concern was prompted in part by an October Univ. of Mass. report that showed huge security holes in the current contactless payment systems. Unlike his pledge to introduce legislation for the excessive returns situation, this year’s promise was merely to ask the Federal Reserve to act.

The Senator is specifically asking the Fed?”in consultation with other bank regulators”?to “require a warning box on the contract to explain the vulnerability of the technology” and to require “credit card companies to disclose the known weaknesses of the technology.”

He also wants the fed to require contactless cards to have stronger encryption. A statement issued by Schumer’s office said that “Schumer called for uniform regulations that will bring all cards up to the highest standards, so that consumers can carry and use the cards without fear.”

Schumer is also asking the Fed to forbid any special promotions to encourage consumers to try contactless cards. “Companies must offer the same terms and deals to customers on a regular swipe card as they would offer on the no-swipe cards,” Schumer said. “Consumers should not be asked to sell their privacy and security in order to get a better deal, especially during the holiday season.”


One Comment | Read U.S. Senator Vows To Crack Down On Contactless Payment

  1. Chris Kapsambelis Says:

    I wonder why the senator is not execised about the use of contactless technology on American Passports. I guess that international travelers are not as sinificant a voting block as consumers.


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