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Credit Industry and Courts Respond to Online Fraud Cases
A recent report indicates that Equifax Inc., Experian and TransUnion LLC, the top three U.S. credit-reporting companies, plan to adopt a single, shared encryption standard. The companies contend that the single industry standard will better protect the vast amounts of consumer data they receive electronically from banks, retailers and credit-card companies each day. The cooperation within the industry, in particular the collaboration between rivals, Visa and MasterCard, reflects the serious threat of online fraud that is being spurred by the growing sophistication of Internet thieves and “crimeware” programs.
In a recent case concerning Internet theft, a San Francisco Superior Court judge has refused to grant a preliminary injunction seeking to force credit card companies to notify individual credit card holders that their accounts are at risk of fraud. The lawsuit filed in June 2005 follows a data-security breach at CardSystems Solutions, a third-party credit card processor, where intruders gained digital access to the details of almost 40 million credit cards. The case generally seeks to test the scope of Section 1798.82 of California’s Civil Code, which requires consumers to be notified when personal information stored on computers is lost, stolen or breached. Finding no evidence of immediate harm, the judge held that the scope of required notification was a central issue to the case, and therefore should be addressed in more detail in subsequent proceedings.
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