Magazine article American Banker

Fraud Changing Fast, and Systems Must Too, Experts Say

Magazine article American Banker

Fraud Changing Fast, and Systems Must Too, Experts Say

Article excerpt

The nature of card fraud is changing rapidly, and existing security networks offer only short-term solutions to crime, attendees were told at Faulkner & Gray Inc.'s second annual Card Security Conference here.

Speakers included Secret Service agents and police detectives, bankers and card-industry executives, all of whom said security risks require sophisticated systems that can adapt quickly to future threats.

Michael Stenger, Secret Service special agent in charge of the financial crimes division, talked about an international network of "economic terrorism" with gangs from Russia, Asia, and Nigeria hooking up with gangs in Los Angeles. He said these criminals are likely to use money stolen from credit card fraud to fund more dangerous criminal activities, such as drug trafficking and gun running.


Daniel L. Colin, detective for the criminal investigations division, Lake County (Ill.) Sheriff's Department, said criminals know credit card fraud is a safer way to steal money because banks, which are insured against losses, usually don't prosecute.

Many speakers said individual institutions must decide how much to spend to protect themselves.

Stephen Cole, president of Cash Station Inc., Chicago, warned against investing too little or not at all in fighting high-tech crime.

He said banks with off-line debit programs must be particularly wary. Mr. Cole added that debit programs are as vulnerable to security breaches as credit card programs are, but they typically lack the same protections, such as neural networks.

"I am here to scare the hell out of you," he said. "The financial capital of some bank will be wiped out because they didn't understand the dangers of off-line debit."

In a veiled compliment to the largest card issuer in the country, Mr. Cole mentioned Citibank as a financial institution that understands the security risks of debit programs. …

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