Tuesday, September 2, 2008

Newegg Stops Collecting Sales Tax for NY

The Return of Tax-Free Online Shopping in NY?
For online retailers cranky about a controversial new law in New York requiring them to collect sales tax on purchases shipped to that state, Newegg has an solution: don't do it.

Newegg, a Web-only merchant that sells computers, accessories and consumer electronics products, has reversed its policy of collecting sales tax on New York purchases, the company confirmed.

When the law took effect June 1, Newegg began collecting the tax like other retailers. It was not immediately clear what prompted the change, and company spokespeople did not respond to requests for comment.

The tax provision sits in a murky legal area that online retailers and some tax-policy analysts say places an unreasonable burden on interstate commerce. Amazon, which is collecting the tax, has filed a lawsuit against New York, charging that the measure is "invalid, illegal and unconstitutional."

The most relevant precedent is a 1992 Supreme Court ruling involving a mail-order company that concluded that a business must have a physical presence in a state in order to be responsible for collecting sales tax on purchases shipped there. Under the new law, New York is requiring online retailers that derive sales through referrals from affiliates who live in the state to collect the tax, even if they have no employees or operations there.

Like many online retailers, Newegg maintains an affiliate program. Web site owners who post banner ads and links promoting Newegg earn commissions of 1 percent to 2 percent of the sales they refer.

The new law led one store, Overstock.com, to drop its affiliate program in New York. Overstock has joined Amazon in its legal dispute against the state.

New York estimates that the provision will generate $50 million in revenue for the state in the fiscal year. Tax experts look to other cash-strapped states to adopt similar measures if the New York law holds up in court.

Newegg collects sales tax on purchases shipped to California, where it is headquartered, and New Jersey and Tennessee, where it maintains operations.

On the policy page of its Web site, Newegg states that, "Sales tax is only required for orders shipping into states where we have or may have nexus for state tax purposes under applicable laws."

When companies don't collect sales taxes on out-of-state purchases, the consumer is still responsible for paying it in the form of a use tax that is reported on the state income tax return. Most people either don't know about that rule or ignore it.

This article appears courtesy of InternetNews.com, where it ran Aug. 25, 2008.

Convenience and Security Boost Payment Card Industry

The Green Sheet 2.0 :: Newswire
With card companies offering benefits such as redeemable reward points, and cash-back offers, customers are being beguiled into using their cards for payment of various products and services. Cards represent a fast, secure and convenient means of payment for goods and services purchased by customers.

Apart from replacing the cumbersome and often risky paper-based transaction system, electronic payments have boosted business prospects of organizations worldwide. By using electronic systems, business organizations and customers are now able to conduct safe and hassle-free transactions. With the rapid expansion of point-of-sale (POS) networks and online markets, electronic payment systems are becoming accessible to increased number of wholesale and retail outlets across the world. Growing adoption of payment cards has also led to a decline in the direct and indirect costs associated with plastic payment cards.

Contactless technology is expected to be a major driving force in the global payment cards market. As compared to conventional magnetic stripe cards, contactless payment cards offer improved security, ensure faster transaction, and eliminate the need for user authentication measures such as signatures. Reduction in the cost of development of contactless technology-based cards is expected to drive up the market for contactless debit cards and RFID smart cards. However, the absence of a large user base for such cards prevents merchants/businesses/retailers from adapting their POS systems to the technology.

Payment Cards: A Global Outlook

Types of payment cards in use across the world include credit cards, debit cards, charge cards, commercial cards, and cash/prepaid cards. Credit cards have emerged as the world's most popular form of borrowing. With Internet emerging as a major medium for purchase of goods and services, debit and credit cards are being widely utilized. Credit cards is a relatively mature market and presently faces testing times with consumers shifting towards debit cards. However, credit card usage in countries such as the United States, UK and France is anticipated to grow. Another form of payment card that is gaining popularity among consumers is the 'top up' card or prepaid card, which is targeted chiefly at consumers without bank accounts.

Debit card transactions across the world are growing rapidly, driven by consumer shift from credit cards to debit and prepaid cards. This shift is mainly attributed to the fact that debit card transactions do not result in any debt accumulation, making it extremely attractive among consumers wanting to keep a check on their expenses. Government agencies are also using debit cards to make payments for medical and health insurance reimbursements. Debit cards offer attractive prospects for financial institutions, which are evolving new strategies to ensure their higher uptake among consumers. Reward programs and cash-back offers are some of the programs offered by issuers to lure prospective customers into using their cards.

Smart cards are being promoted as the future of secure payment transactions. Incorporating a microprocessor chip, smart cards are considered ideal for user identification and authentication. Smart cards find use in ID programs, network security, and transportation sectors. With growing number of consumers holding smart cards, local merchants are expected to upgrade their point-of-sale terminals for acceptance of these cards. This would subsequently promote conversion of magnetic stripe-based credit and debit cards to chip-based smart technology.

Card fraud is a major concern facing the payment cards industry. Card fraud, identity theft, and card skimming are some of the challenges faced by this industry. However, the development of advanced technologies such as RFID, and biometric authentication are expected to facilitate card issuers to effectively deal with card fraud.

The report titled "Payment Cards: A Global Outlook", published by Global Industry Analysts Inc, provides statistical anecdotes, market briefs, and concise summaries of research findings. The report provides a recapitulation of recent mergers, acquisitions, and other noteworthy strategic corporate developments. The report also offers a prelude to major regional markets, providing the reader with a macro level understanding of markets. Major markets discussed include United States, Canada, Japan, Europe, Austria, Belgium, Germany, Hungary, Italy, Switzerland, UK, China, Hong Kong, Malaysia, South Korea, Argentina, Brazil, and Mexico, among others. The report also includes an indexed, easy-to-refer, fact-finder directory listing the addresses, and contact details of 248 companies worldwide.

For more details about this research report, please visit
http://www.strategyr.com/Payment_Cards_Industry_Market_Report.asp

India - Debit,Credit a Hit/Scores Big - RBI

Mumbai: With a larger number of banks issuing plastic, and merchant acquisition business also scoring well with the advent of retail, it is no surprise that card transactions, both debit and credit, were up by more than 42 per cent to Rs70,459 crore during 2007-08, according to the latest data from the Reserve Bank of India (RBI).

The RBI's latest numbers testify that growth in plastic money was much higher than the 24.51 per cent recorded in 2006-07. This is in part on account of the greater adoption of banking technology by the public, and because of banks encouraging the use of cards on account of the lower per-transaction cost.

Besides convenience of not carrying cash, the ramping up of ATM networks for both cash and non-cash transactions, and the proliferation of merchant acquisition points across the country by both new organised retail and traditional retail merchants, card transactions have garnered wider acceptance. Additionally, banks have provided incentives such as cash-back schemes and discounts at certain retailers to popularise the use of plastic money.

The use of debit cards, for banks, also ensures that more cash stays in customer's accounts. Also, the card ensures fewer visits to the branch, as most account functions such as cash deposit / withdrawal, cheque deposit, ordering chequebooks and statements, and even funds transfers can be done via the ATM. Also, it is more cost effective for a bank to let a customer use the card, rather than service him at a branch.

RBI's data indicates that the number of cards issued increased by 46.7 per cent to 88.31 million as of March 2008, compared with 60.17 million at the end of financial year 2006-07.

During 2007-08, the total credit card outstanding rose 43.6 per cent to Rs 5,843 crore. Till May 23 this year, the outstanding shot up by 87 per cent to Rs 12,375 crore. In 2006-07, the value of credit card transactions went up by 22.06 per cent.

Another driver for the adoption of plastic money is the growth of e-commerce and transactions via the Internet. Travel services such as airline and railway tickets are the primary drivers in this segment, and an increase number of people use cards as a payment mechanism for utility services.

Bankers expect debit card usage to surpass credit card usage mainly on account of convenience, which is a primary driver for the adoption of plastic money. Moreover, unlike credit cards, debit cards do not involve any borrowings / loan from the bank, and typically do not need a credit review before they are issued, making them ideally suited to a larger population of the banked public.

Credit, Debit Card Fraud and Skimming Cases Rise

Pictured below is an ATM Machine with a camera placed on what initally appears to be an innocent brochure holder, but in reality, captures PIN numbers of consumers withdrawing cash at the ATM. What isn't shown, is the skimming device, which captures the information off the magnetic stripe and wirelessly sends it to the perpetrators ususally parked in a car with a laptop about a block away. Here's a story from the Ventura County Star reporting on the recent surge in credit and debit card fraud cases around the country.

Some local police are reporting an increase in credit and debit card fraud cases this year, with thieves using high-tech tools to steal confidential financial data from unwary customers at stores, restaurants and gasoline stations.

The number of cases has "really exploded in the last month and a half," said Jim Graham, a detective with the Thousand Oaks Police Department. "There's been a big jump in this from Bakersfield all the way down the coast of Southern California," he said.

Many of the thefts are reported to banks but not police, so exact counts of victims and dollar losses are hard to come by, he said. Authorities estimate worldwide losses to be in the billions of dollars annually.

Thieves have an array of devices to pilfer credit and debit card numbers, including "sniffer" software programs that capture PINs and other sensitive information.

One of the more popular devices being used in Ventura County is a "skimmer," Graham said. The gadget captures information on a card's magnetic strip, which then is cloned to withdraw money out of a person's account at an ATM or to buy merchandise.

Skimming machines were once bigger, but thieves are now making "some the size of a matchbox," Graham said. That makes it easier for thieves to place them on pumps at gasoline stations or at store terminals where shoppers swipe their cards.

Police say thieves return a week or so later to retrieve the skimmers and extract the data inside.
"If you figure they're getting $300 to $400 for every card, it's not hard to see how profitable it can be," Graham said.

It's also a hard-to-solve crime, said Rick Kline, an Oxnard police detective who investigates fraud. "We're solving maybe five out of 100," said Kline. (Editor's Note: Are they actually recruiting people to get into the game?)

While many stores, ATMs and gas stations have video surveillance cameras, "the quality of the videos is often very poor," Kline said. Also, thieves "generally wear a hat" or other disguise, "making it very hard to identify them," he said.

"Most of these crimes are solved when the victim has an idea of who's behind it," Kline said. Susan Nettles of Ojai has yet to find out who stole her debit card information and then used it three times at ATMs in Huntington Beach to withdraw almost $600 from her account, although she thinks she knows where her card was compromised.

"I think it happened at the Cost Plus store in Oxnard," Nettles said. Cost Plus announced in July that the electronic PIN pads at eight of its Southern California stores, including the one in Oxnard, might have been tampered with between February and April. Since then, Cost Plus has made numerous changes to improve security, including replacing some of the PIN pad machines, said spokesman Dan Gagnier.

"The newer machines are a lot harder to tamper with," Gagnier said. The company "wants its customers to feel comfortable using their cards at our stores." Cost Plus also is working closely with credit card companies, banks and law enforcement agencies "to ensure that any of its customers affected by this incident are identified." Nettles filed a police report, something authorities say many victims fail to do. She said she now is leery of using her debit card. "Now I try to use cash when I can," she said.

Thieves aren't the only ones availing themselves of high-tech tools. Credit card companies and banks are increasingly relying on sophisticated software to monitor customer spending habits. The software flags out-of-the-ordinary purchases or payments and alerts authorities. Robert Meyers, a Ventura County supervising deputy district attorney who investigates fraud, said such software has "generated many more cases" for prosecutors. But investigators said victims also should report the crimes to police. For starters, it would give investigators a better idea of the scope of the problem, Graham said. "We're able to see if there are patterns," he said, including whether a sizable number of victims might have purchased things at particular stores or places.

Friday, August 29, 2008

eCommerce Technology Spending to Rise

Internet Retailer conducted a study via email participation of 92 "web only" merchants and other's participated and here are the findings:

Though 72 percent of internet retailers plan to purchase e-commerce applications or services this year, they'll be spending less than they expected to spend last year, according to Internet Retailer's latest survey on e-commerce technology spending intentions (via Retailer Daily).

A whopping 73.6 percent of respondents say they plan to increase those budgets 15 percent or less, compared with 49.4 percent of respondents last year who said so; moreover, about half (47.2 percent) say plan to increase those budgets 10 percent or less, the survey found. Below, additional findings from Internet Retailer's survey.

The top spending priorities of online merchants:

Replacing outdated e-commerce platform: 28 percent
Miscellaneous apps: 20.5 percent
Content management system: 11.9 percent
Web analytics: 11.8 percent
Order management system: 8.2 percent
Site search software: 6.8 percent.
Among the top new website features or applications to be implemented:
Customer reviews and ratings: 35.5 percent
Inventory availability tools: 34.2 percent
Blogs, forums or videos: 32.9 percent
Streamlined navigation using Web 2.0: 26.3 percent
Mouse-over tools: 25 percent


Most online merchants, however, intend to keep their current platforms and applications:

67.1 percent intend to keep their rich media applications.
61.7 percent don't intend to replace their web analytics software.
55.2 percent will continue to used their present content management system.
55.2 percent don't plan to buy site search software or service.
52.6 percent will stick with their current order-management system.
46 percent plan to keep their in-house or third-party platform.

Other highlights from the survey:

At two-thirds (67.1 percent) of e-retail companies, the official with the final word on tech purchases is the CEO; next are the CIO (9.2 percent) and CMO (6.6 percent).

The annual e-commerce tech budget is $50,000 or less at 51.4 percent of online retailers; that budget at 27 percent of retailers ranges from $50,001 to $200,000; 9.5 percent have budgets of $200,001 to $999,999; 5.4 percent have $1 million to $2.5 million; and 6.7 percent have budgets of more than $2.5 million.

51.3 percent of the surveyed retailers don't plan to hire a consultant or other third-party help for a major technology upgrade in 2008.

73.7 percent run their own internal fulfillment program. Among the remainder that do outsource fulfillment, 65 percent plan to keep their third-party provider.

About the study: The survey was emailed in early June to subscribers of IRNewsLink, Internet Retailer's e-newsletter; responses were collected and analyzed by Vovici Corp.; 92 web-only merchants, chain retailers, catalog companies and consumer brand manufacturers took part in the survey.

Related: Investment in the web by big retailers will increase even more as top executives at the largest retail chains become more aware of the power of the web in driving multi-channel sales, says Kasey Lobaugh, direct-to-consumer practice leader at consultants Deloitte LLP.

Many retailers today, he says, don’t realize that store sales preceded by visits to retail web sites account for about 20% of sales and online-only sales for another 7%, accounting for 27% of total sales in one way or another driven by the web.

“Today, most retailers only see it as a 93%-7% split, where the 93% of sales are in stores and 7% online; they don’t realize that 20% of store sales are influenced by the web,” Lobaugh says.

But that mindset is changing fast among senior retail executives, he adds, especially as the percentage of total sales driven directly or indirectly by the web grows to about 50% over the next few years. “CEOs will soon recognize that what they thought was 7% of sales driven by the web is actually about 50%, so there is going to be a big shift in investing in a web-focused multi-channel retailing environment,” Lobaugh says.

Get a Phone Message After Every Transaction?

Times...they are'a changing. In the past, telemarketers would call and try to get us to "buy" something. Now there's a group who wants to call you AFTER you "buy" something. Actually they plan to send an SMS to cellular phones or PDA's everytime a credit/debit/ATM card is registered with them and subsequently used for a transaction. They are essentially pitching what they have to offer as a Value Added Service Provider, (VASP) Rather than selling "ring tones", they are, instead, trying to "cell" notifications of credit/debit/ATM card use. Initially it sounds like it has a ring to it, but I don't know what to think of this idea quite yet.

What I do know is that the iPhone's OS has a security hole which can expose private information. (The flaw being a simple two-step trick which can be accessed directly from the iPhone's password protected interface, gives full access to a user's contact list, e-mail and text messages, including access to all SMS's.) see: Huge Security Flaw Puts All Private Information At Risk - Gizmodo

The other question I would pose, in order to determine the viability of the idea would be how much each SMS would cost the end-user. If it costs, for example 50 cents for each transaction notification, a $25 transaction would have effectively, a 2% discount rate. Here's a tip...for that money, banks could offer a "Transaction Insurance Protection Plan" (see, I told you I'd give them a TIPP...) Here's there press release:

MIAMI, Aug. 28 FL-CNSC-Debit Security Aug. 28 /PRNewswire

Ivan Ochoa and Daniel Davila, executive members of the newly-created company C.N.S.C. (Charge Notification Services Corp.) are launching their proprietary and patented credit, debit card and ATM transaction security service in the United States.

The premise of the C.N.S.C. service is to put the cardholders in control of their own identity security by instantly advising them via SMS (Short Message Service) to their cellular telephones or PDAs each time a charge or withdrawal from a C.N.S.C. covered card is made.

With the proliferation of cellular phones, this service is expected to reduce credit and debit card fraud significantly for individuals or companies who choose the coverage. Credit card fraud in the United States has increased in terms of total losses and is expected to continue growing, according to studies conducted byThe Nilson Report.

A Cybersource report indicates the same escalating trend ine-commerce transactions, surpassing the two billion dollar mark for 2007. Those affected by fraudulent activity include the card user, who may spend months trying to clear up an unauthorized transaction; the financial institution issuing the credit or debit card, as each time a fraudulent transaction is detected several time-consuming steps must be taken by staff, making it an expensive proposition for banks and issuers; and ultimately by the merchant accepting the fraudulent charge, as in most cases, the charge-backs are a direct loss to them. "The result of this is that society at large loses, even those who do not use credit or debit cards, since it makes every product and service more expensive. It is a zero sum game in which those who operate within the law lose out," stated C.N.S.C., E.V.P. and Chief Operations Officer Daniel Davila.

Referring to the most recent large-scale credit card fraud cases, C.N.S.C.Chief Executive Officer Ivan Ochoa comments: "We know that merchants have been slow to advise cardholders of fraudulent activity and that despite the existing firewalls and algorithms developed to detect abnormal usage patterns,the technology exists that allows criminals to access card numbers, as well as social security and drivers license information. Fraud has become everyone's problem, and consequently, everyone's responsibility. We are confident that with a minimal investment on the part of card issuers and the cooperation of cardholders, we can overcome this pernicious social and economic predicament affecting us all."

Messrs. Ochoa and Davila have a combined five decades of experience in the financial services industry. Mr. Davila's background includes 16 years at American Express where he was a Senior Director within the Global Network Services (GNS/Franchise) division and more recently, two years as Vice President and Chief Risk Officer of the credit card division at Russian Standard Bank (RSB) in Moscow. While at RSB, Mr. Davila launched a similar SMS credit card fraud protection service with great success, resulting in an overall significant reduction of fraudulent transactions. Mr. Ochoa's 25 years in the financial services industry include executive positions within American Express and MasterCard International, where he was Chief of Staff for Latin American countries. His areas of expertise include managing operationsfor multi-markets, re-engineering, quality control and technology. Mr. Ochoahas lead major innovative developments in products and systems.

SOURCE Charge Notification Services Corp.

Thursday, August 28, 2008

More on Hacker's 11

There's been a lot of press relating to the 40 million card breach and the subsequent arrest of the Hacker's 11. In fact, I've done several posts on it myself.

It was all done by something called "wardriving," (
see WarDriving 101) which involves driving through areas with a laptop searching for accessible wireless Internet signals, and then tapping into those systems to install "sniffer programs" that capture credit and debit card numbers as they move through a retailer's processing networks.

Perhaps the worst part of this is that nothing can be done to prevent it from happening again. Members of the international stolen credit and debit card ring, which included some U.S. citizens, were locked up -- but you can't lock up a technique. As long as there's WEP, there's theft.

As I mentioned yesterday, the financial community is heavily regulated (
see yesterday's post "PCI, PCIDSS 101) to protect consumers' data, which is encrypted by law and industry agreement. No one "purposefully" shortcuts that process. But the crooks found a way to insert a data sniffer into the system so that by the time cards were swiped and the information was released from the point-of-sale device, the information already had been snagged.

The industry will devise a solution. But in what amounts to a digital arms race, criminals will figure out a way around it. The Center for Democracy and Technology advises consumers that, as more and more of their lives are processed online, they must take more responsibility as they are handing over personal and financial information.

Editor's Note: I personally, think the solution lies in "NOT handing it over at all" but instead, using HomeATM's Personal PIN Pad for online purchases. The fact is: Anytime you type in your credit/debit card number a consumer is ripe for hacking. Myriad methods to do it, and more and more on the way every day. Maybe we can get the environmentalists to go after the keyloggers or at least have the owls spot them... Seriously, though, entering your credit card information via a keyboard on a PC is asking for trouble. This is why I have spent a lot of time trying to make the case for a personal PIN Entry Device. (
See Reverse Matriculation, Bring the Device Home)

HomeATM is working vigilantly on creating and putting forth a program that will get their Personal PIN Entry Device into the hands of as many consumers as possible. We believe it won't be long before that happens and millions of consumers have one. However, in the meantime, if you absolutely feel the need to purchase something online, keep these two rules of thumb at the forefront of your awareness:

1. When typing in a credit card number, make sure the web page is secured (more secured), as indicated in the URL as https -- the "s" standing for "secure."

2. Do not enter your financial or personal information while using a wireless network. Someone could be sitting outside of Starbucks with a program that is sniffing the information typed into your keyboard and stealing that (and your buck$) right out of thin air.


Those crooks thank their lucky stars that your bucks don't stop there... thank yours that it won't be long before you can be the proud owner of your own personal HomeATM!

75% of "Online" American's Use eBilling Services

CheckFree released the results of an annual Consumer Banking and Bill Payment Survey that they sponsor and according to their release, "more Americans than ever, an estimated 63.1 million households or three-fourth's of those online, are paying their bills online rather than writing paper checks.

The Consumer Banking and Bill Payment survey has been conducted annually since 2002 by CheckFree Consumer Insights, a consumer research and data analytics unit of Fiserv focused on tracking the latest online banking, billing and payment trends. What follows is additional information – including charts, survey findings and a complimentary prerecorded webinar – about the 2008 Consumer Banking and Bill Payment Survey.

Additional Survey Findings

Among younger respondents under age 45, 57 percent considered the environment as an important reason why they use online billing and payment, compared to 44 percent among those in the 45-and-older age group.

Fifty-five percent of those living in the Western United States cited environmental concerns as a key motivation for online bill payment adoption versus 49 percent for other regions.

Major credit cards (48 percent) were the most frequently cited e-bills received and paid at online banking sites, followed by cable or satellite television (42 percent), cellular phone (41 percent), electricity (38 percent) and local telephone (34 percent).

Fifty-four percent of respondents who were aware their online banking site offers e-bills said they receive at least one e-bill, while 46 percent do not. The most appealing features of e-bills were due-date reminders, convenience and assurance that bills are never paid late.

E-bill recipients were 45 percent more likely to report being extremely satisfied with their bank or credit union than non-e-bill users. Fully half of e-bill recipients said their experiences with e-bill had made them less likely to switch financial institutions in the future. E-bills are electronic representations of paper bills that are securely delivered directly to a business or financial institution Web site. With e-Bills, consumers can review balances, transactions and all other details available in paper bills, and schedule payments with just a few clicks of the mouse.

Overall, 67.9 million households, or 80 percent of the estimated 85.1 million U.S. online households, use online banking services, up from 63.4 million in the 2007 survey. [See Chart: Consumers’ Online Banking Usage Mirrors Internet and Broadband Trends.]

Those living in Western (83 percent penetration) and Southern (81 percent penetration) states were more likely to adopt online banking than those in the Northeast (78 percent) and Midwest (78 percent).

Respondents identified 24/7 access to account balances, time savings and better organization of their finances as the most important benefits of conducting banking activities online.

Watch Recorded Webinar

In this complimentary webinar, "Consumer Billing and Payment Trends," senior researchers from CheckFree Consumer Insights discuss compelling findings from this year's Consumer Banking and Bill Pay Survey and David Baron, vice president of Financial Research Services for Harris Interactive, provides insights into what made the survey successful.

>> Watch Webinar

Wednesday, August 27, 2008

PCI, PCI DSS 101

Here's a comprehensive article explaining the Payment Card Industry Security Standards Council requirements pertaining to protecting card holder data.   The article, written by Jeff Kress from NewsFactor.com does a good job putting, what many tend to consider to be a confusing subject,  PCI, into a better perspective.

 
"Any firm that stores, processes or transmits credit card data should comply with security standards or risk great losses. Whether we buy goods online or in a store, credit card purchases are a way of life.  Some may worry about transactions over the Internet, but they generally assume credit card data and related personal information with merchants are secure. But are they?

According to analysts, financial fraud surpassed all forms of computer losses in 2007. The most noted credit card loss was with TJX (parent company of HomeSense and Winners) in 2006. The security breach resulted in the loss of 45 million credit- and debit-card numbers. The TJX losses reportedly will exceed US$1 billion. The breach was due to inadequate security controls. In addition, TJX may have also lost customers' personal information such as drivers' license numbers. The problem is that TJX is not alone: many merchants have inadequate controls to protect credit card information.

To address financial fraud, major credit card companies created an organization, the Payment Card Industry Standards Council (PCI). Its goal was to set standards to enhance the security of credit card payment data. The result is the Payment Card Industry Data Security Standard. (PCIDSS)

Merchants that store, process or transmit cardholder data must comply with the PCI standard. Reports indicate that larger-merchant compliance is improving. On January 22, 2008, Visa reported that as of the end of 2007, 77 percent of large merchants and 62 percent of medium-sized merchants were PCI compliant.  These are big improvements compared with the previous year, when less than 20 percent of large and medium- sized merchants were deemed compliant. These two categories represent approximately two-thirds of Visa's transaction volume. However, smaller merchants and government agencies are slower in adhering to PCI requirements.

PCI requires merchants to verify compliance with the data security standard. A merchant's credit card transaction volume determines what compliance validation steps are followed. Larger merchants are required to have annual on-site audits and network scans performed quarterly by certified assessors. Smaller merchants may only be required to do self-assessments. The merchant levels differ between the credit card companies so one should refer to the merchant agreement for specific requirements. Although compliance validation requirements differ, all merchants that store, process or transmit cardholder data, regardless of size, are required to comply with all aspects of the PCI standard. Failure to do so may result in a merchant being fined and/or terminated from the processing services.

Not complying with PCI requirements can be costly. If a merchant's systems are breached, the merchant is responsible for all costs associated with inappropriately used credit cards. The merchant is also required to pay all costs associated with informing consumers, canceling outstanding credit cards, issuing new credit cards and forensic audit costs. Analysts have set the costs of credit card breaches at between $100 and $300 per credit card record. A breach can result in a loss of merchant reputation, lost customers or customer lawsuits. Credit card companies can also issue fines for noncompliance even if no breach is detected. To prevent such costs, merchants need to comply with the PCI standard.

PCI Standard's Objectives


Build and maintain a secure network. Most merchants think their credit card systems are secure. But in the context of PCI, what is a credit card system? The PCI standard considers any network, server or application connected to the systems that store, process or transmit to be the credit card systems. PCI compliance on such a large scale can be difficult to achieve. The solution is to set up the credit card systems so they are isolated from other merchant systems.

The PCI standard identifies two primary requirements for building and maintaining a secure network. The first is to install and maintain a firewall configuration to protect cardholder data. Firewalls must protect all credit card systems from external access. In addition, the PCI standard identifies the need to change vendor-supplied defaults for system passwords. Systems that have not changed default settings and vendor-installed passwords are common compliance violations.

Protect cardholder data: Keep cardholder data stored to a minimum. Stored credit card information needs to be protected using strong encryption standards. A common violation occurs when merchants store the magnetic stripe data from a credit card. The data contains all the information a criminal needs. Such information should never be stored. PCI information suggests that most merchants are unaware that their systems were storing the complete magnetic stripe data.

Maintain a vulnerability management program: It is important to protect systems against such threats as a computer virus. Also, follow appropriate processes for making changes to systems. Merchants that collect credit card information from e-commerce Web sites need strong security processes to develop and monitor the Web sites. Weaknesses include missing and outdated security patches. Also, Web applications often have weaknesses that are accessible by anyone on the Internet.

Implement strong access control measures: Limit access to cardholder information on a need-to-know basis. Bad practices such as group sharing of user accounts, not changing passwords regularly or not having minimum password standards are not acceptable. Other weaknesses include inadequate access controls due to improperly installed merchant point-of-sale equipment. While credit cards are typically stored on systems, the PCI standard requires strong physical controls in merchant facilities.

Regularly monitor and test networks: Merchants need to track and monitor all access to network resources and cardholder data. This requires logging and monitoring systems on a timely basis. All credit card systems need to be regularly tested. The requirements in the PCI standard are explicit and detailed. For example, perform vulnerability assessments at least quarterly or after any significant change to the network. Test credit card systems annually. This includes annual penetration testing on both the network and application layer. The standard also requires effective intrusion detection systems to alert staff to possible security breaches.  A lack of effective monitoring is a weakness. Merchants often find it difficult to meet the PCI standard requirements for monitoring and testing its network. Segmenting the network to isolate the credit card systems will reduce the time and costs associated with meeting these requirements.

Maintain an information security policy: Merchants need a strong security policy that sets the tone for the whole company. Staff awareness processes need to ensure employees are aware of their responsibilities. Many security breaches are caused by staff who are unaware of their role in keeping the company's data secure.

So what happens if a merchant can't meet a specific PCI requirement? The standard allows merchants to implement compensating controls. Merchants need to show that the compensating control effectively mitigates the risk addressed by the PCI standard.

The PCI Data security Standard sets security and monitoring requirements that far exceed some merchants' existing capabilities. Smaller merchants would like to have the standard reduced to reflect their size. However, for now, merchants that store, process or transmit cardholder data must comply with the standard.

There are many articles on PCI and the Data security Standard. However, the best source for guidance and materials is the Payment Card Industry Security Standards Council Web site at: https://www.pcisecuritystandards.org/index.htm. Merchants should also refer to their respective merchant agreements for guidance.

A common misconception is that smaller vendors are not required to be PCI compliant. Some think not being compliant is OK as long as they continue to make progress. That's what credit card firms reportedly told TJX before it was breached. That did not prevent TJX from facing losses that could reach billions of dollars. So make sure you and your clients take steps to protect credit card data before harm occurs to your firm or clients' reputation, before customers are lost and before fines and litigation start."

Several Million for $150...Hop Aboard the PCI Express!

There's PCI, and then there's just plain ole' PC.  What are several million records doing on a laptop in the first place?  And why would the National Bank of Scotland employ a "third party" archiving company that sells it's used laptops containing personal data on eBay?  I found a good article on PCI and I'll post it next, but first this amazing faux pas...
  
When Andrew Chapman bought a PC on eBay for about $150, he didn't expect the added bonus -- the personal records of millions of customers of a major international bank.

Chapman says he found "several million" personal records on the PC. The records, which belonged to the National Bank of Scotland, its NatWest subsidiary, and American Express, had been stored on the machine by a third-party archiving company, according to news reports about the eBay purchase of the National Bank of Scotland data. 

The data includes account details, and in some cases, customers' signatures, mobile phone numbers, and mothers' maiden names, Chapman says.  Chapman said anyone with a basic knowledge of computer software would have been able to find the data fairly simply. "The information was in back-up CDs and in ISO files, so it would have been possibly quite easy to find if you know something about computers," he said.

A spokeswoman for data processing company Mail Source, which is part of the archiving firm Graphic Data, said it was investigating how the computer equipment had been removed from a secure location. "The IT equipment that appeared on eBay was neither planned nor instructed by the company to be disposed," she said.   Spokespeople for Graphic Data, the banks, American Express, eBay, and U.K. law enforcement agencies all expressed concern about the incident and said they would begin an investigation as soon as Chapman gives the computer back to Graphic Data.

30% of Canadian Back to School Shoppers To Do It Online

In what looks to be an unabashed plug of Verified by Visa, the payments industry behemoth recently polled online shopping plans of Canadiens and found the following:

TORONTO, ONTARIO, Aug 27, 2008 (MARKET WIRE via COMTEX)

Almost one-third of Canadians in need of books, computers and back-to-school supplies will avoid the hustle and bustle of traditional shops in favour of the World Wide Web this year.

According to an August 2008 survey commissioned by Visa Canada(i), 13 percent of Canadians are planning to shop online between now and Labour Day and, of those, 40 percent plan to spend more online than in the same period last year.

With the average estimated online spend before Labour Day totalling $881, survey respondents said they were turning to the Internet because of its convenience (41 percent), better prices (41 percent) and superior selection than brick-and-mortar retailers (31 percent).


While restocking backpacks and lockers is one reason to turn to the computer, Canadians shopping online also planned to purchase travel (45 percent), computers or electronics (41 percent) as well as fall and winter clothing (32 percent).

"It's interesting to see the variety of goods Canadians plan to buy online," said Zack Fuerstenberg, Director, New Channels, Visa Canada. "Last year when we conducted similar research, half of respondents were only planning to purchase books."

Fuerstenberg continued by pointing out that the categories of merchandise most attractive to online shoppers are mirrored by the types of merchants that participate in the Verified by Visa(R) program. "Air Canada, Dell, Best Buy, Future Shop, West Jet, Via Rail, Telus and Aldo are all participating in the program along with 2,000 other participating Canadian merchants."

The Verified by Visa service, which is supported by Visa-issuing financial institutions and participating merchants, works through the use of a personal password and helps ensure that purchases made online with a Visa(R) card are made by the actual cardholder. Free for consumers, the Verified by Visa program has been adopted by more than 200,000 merchants and 378 million Visa cardholders around the world. Canadian Visa cardholders can sign up for this program at their Visa card issuer's website, through visa.ca or when shopping at participating merchant websites.

The Verified by Visa service is just one of Visa's multiple layers of security in the eCommerce channel. Another layer that helps protect online merchants and cardholders shopping via the Web is the "three-digit code," or CVV2, which is the number printed on the signature panel on the back of a Visa card. It helps to prove to the merchant that the cardholder has the card in his or her possession when ordering online or over the phone. AVS, or the Address Verification Service, helps ensure that the person making a purchase with a Visa card is the same person who receives the Visa card's monthly statement. Merchants begin the process by matching the address provided by the cardholder during check-out to the billing address the Visa card issuer has on file.

(i)For the Visa Back-to-School Shopping Survey, a total of 1005 respondents were interviewed during the period between August 6th - 10th, 2008. The margin of error is +/-3.09% at 95%.

Tuesday, August 26, 2008

Keeping up with the Jones' (& the Discover vs. MasterCard/Visa Lawsuit)

Finds No Conspiracy Between Visa and MasterCard

Purchase, NY. - MasterCard Worldwide said  it is pleased that Judge Barbara S. Jones narrowed the scope of Discover’s antitrust case against MasterCard by granting certain aspects of MasterCard’s summary judgment motion.

In particular, Jones found that despite Discover’s assertions, there is no evidence of a conspiracy between MasterCard and Visa. She also dismissed Discover’s debit-related claims against MasterCard.

In dismissing Discover’s claims of an inter-association conspiracy between MasterCard and Visa, the court’s decision recognizes the intense competition between MasterCard and Visa, which benefits consumers in the form of innovative products and programs.

Further, Judge Jones limited the scope of the trial by dismissing Discover’s debit-related claims against MasterCard. In granting MasterCard’s motion, the Court recognized that Discover failed to establish that MasterCard’s Competitive Programs Policy (CPP) somehow excluded Discover from offering debit cards. This is not surprising since, the CPP only applied to credit and charge cards, not debit cards.

MasterCard said it is disappointed that the Court granted aspects of Discover’s summary judgment motion seeking to apply collateral estoppel in its claims against MasterCard, but pleased it rejected Discover’s attempt to obtain broader findings. Collateral estoppel is the application of certain findings in one lawsuit to a subsequent one. 

However, in no way does Judge Jones’ ruling change the fact that Discover will have to establish that MasterCard and Visa, rather than its own business decisions, caused the damages it alleges. The jury will be able to fully evaluate all evidence concerning Discover’s damages claims, and MasterCard looks forward to demonstrating the weaknesses of those claims in court.

For example, public results of Discover’s business performance after the CPP was withdrawn show that Discover has not seen any increase in its overall percentage of the credit card volume share from third-party issuance. This real world evidence highlights the weakness of Discover’s claim that the CPP damaged Discover by preventing Discover from entering into third-party issuing relationships. Indeed, the most recent results show that Discover’s overall credit card volume share—including both Discover-issued and bank-issued Discover cards—actually declined from 5.46% in 2006 to 5.33% in 2007.

A further demonstration of the weakness of Discover’s damages claim is the testimony of Discover’s own executives, who had testified before and during the DOJ case that the repeal of the CPP would hurt their company, and create a situation where Discover would not be able to build volume by attracting third-party issuers.

Visa responded to Judge Jones ruling as well with the following release:
 
"Visa is pleased that the court resolved several disputes in this case at this stage. Among other things, the court:
  • Dismissed Discover's claims of debit monopolization against Visa; and
  • Rejected Discover's allegations of an inter-association antitrust conspiracy between Visa and MasterCard.

"As a consequence of these summary judgment rulings, Discover cannot challenge the legality of the agreements Visa has signed with its debit issuance partners. As such, it is unlikely the Discover litigation will have a significant impact on Visa's ongoing business operations.

"In addition, the court granted collateral estoppel on a limited number of issues that were determined in an earlier, related lawsuit. This ruling, however, does not establish all the elements of Discover's claims. Discover must still prove the remaining elements of its case and any damages at the upcoming jury trial.

"Visa believes it will be clear to a jury that it is Discover's own business model and decisions - not the actions of competitors - that have limited its options in the marketplace. Discover has been free to engage in bank issuing partnerships since 2004, but has yet to demonstrate that it can do so in a meaningful way.

"Although we expect Discover will be unable to prove the level of damages that it seeks in this case, Visa remains committed to resolving legal challenges in a manner that allows us to remain focused on our business activities. To that end, as part of the Visa Inc. restructuring process, the company developed a retrospective responsibility plan that addresses potential liability in certain U.S. litigation ("covered litigation"), including the Discover case. Additional information regarding the company's retrospective responsibility plan is available in the company's Final Prospectus, dated March 18, 2008, at http://www.sec.gov/."

Monday, August 25, 2008

Online Travel Numbers Grow

This year US travel sales booked online will reach $105 billion, up 12% from 2007 according to http://www.emarketer.com/
According to the graphic, illustrated on left, it will continue to grow.

eMarketer forecasts that US online leisure and unmanaged business travel sales (including airline, hotel, rental car, vacation package, intercity rail and cruise) will reach $105 billion. Furthermore, from 2007 to 2012, sales will increase at an 11.6% average annual rate. Even though online travel sales are growing, fewer travelers are booking their trips online.

"The fact that fewer travelers are booking online is not due to economic concerns—online travel bookers are an affluent demographic—it is caused by frustrations related to the planning and booking capabilities of online travel agencies," says Jeff Grau, senior analyst at eMarketer and author of the new report, US Online Travel: Planning and Booking. "This, in turn, is spurring a renewed appreciation for the expertise and personalized services offered by traditional travel agents."

In other words, online travel sites are steering customers back to offline travel agents—a complete turnaround of what has been happening in the category for the last decade.

"Not so long ago industry observers cast traditional travel agents as has-beens," says Mr. Grau. "Perhaps this has helped them to focus on what they do best: provide travel expertise and personalized service." Customer dissatisfaction with online travel agencies (OTAs) stems specifically from unfriendly booking engines and navigation tools. With few points of differentiation, OTAs have a hard time building customer loyalty and have driven travelers right into the open arms of traditional travel agencies—and new online competitors.  "Mired in old technology, the OTAs have failed to keep pace with a newer and more innovative breed of travel Websites built around user-generated content," says Mr. Grau.   Online travel communities are emerging to carry the torch of innovation.

"In addition, a new breed of matchmaking travel sites is bringing traditional travel agency talent online," says Mr. Grau. "Sites like Zicasso and Tripology help travelers to exotic locales find travel agents tailored to their interests and needs."

World's Largest Hotel Chain Hacked - 8 Million at Risk

Eight million people at risk of ID fraud after credit card details are stolen by hotel chain hackers


Security breach: A Best Western Hotel in Amsterdam

Up to eight million people are at risk of ID fraud after a hacker breached the security system of the world's largest hotel chain.  An Indian hacker broke into the IT system of Best Western Hotel Group and stole personal details of everyone who has stayed there in the past 12 months.  The details, which included home addresses, phone numbers, place of employment and credit card details, were sold on through an underground network controlled by the Russian Mafia.

The information is thought to be worth up to £2.8billion. Experts say that if it falls into the wrong hands it could spark a 'major crimewave'.   'They've pulled off a masterstroke here,' said security expert Jacques Erasmus, an ex-hacker who now works for the computer security firm Prevx.

He added: 'There are plenty of hacked company databases for sale online but the sheer volume and quality of the information that's been stolen in the Best Western raid makes this particularly rare.  'The Russian gangs who specialise in this will have been exploiting the information from the moment it became available. In the wrong hands, there's enough data there to spark a major European crimewave.'  

Best Western became aware of the theft on Thursday night. It instantly disabled the log-in account from which the information was stolen, but not before the details of millions of people had been removed.   Tim Wade, head of marketing for Best Western in Britain, said it was 'unlikely' the thieves got details of every booking in Europe because of the way their system worked. He added: 'We are investigating further and working with our credit card partners to ensure the interests of our guests are protected.'  Last night a statement on the Best Western website said it did not believe British customers had been affected.

Fraud Takes A Toll on Bay Area

Fraud has taken it's toll on the Public Transportation Industry which has seen a flurry of actvity regarding recent hacks on their RFID based card programs. 

First there was the Oyster Card Hack in London,  followed by  the Massachusetts Bay Transportation Authority's "Charlie Card." which was hacked by 3 MIT students.  ("Sorry Charlie...You'/ve Been Hacked!") Now it appears that the RFID based FasTrak, I-Pass and E-Z Pass Tollway systems are easily hackable as well.   

Here's a story published in MIT's Technology Review:

Drivers using the automated FasTrak toll system on roads and bridges in California's Bay Area could be vulnerable to fraud, according to a computer security firm in Oakland, CA  Despite previous reassurances about the security of the system, Nate Lawson of Root Labs claims that the unique identity numbers used to identify the FasTrak wireless transponders carried in cars can be copied or overwritten with relative ease.

This means that fraudsters could clone transponders, says Lawson, by copying the ID of another driver onto their device. As a result, they could travel for free while others unwittingly foot the bill. "It's trivial to clone a device," Lawson says. "In fact, I have several clones with my own ID already."

Lawson says that this also raises the possibility of using the FasTrak system to create false alibis, by overwriting one's own ID onto another driver's device before committing a crime. The toll system's logs would appear to show the perpetrator driving at another location when the crime was being committed, he says.

So far, the security flaws have only been verified in the FasTrak system, but other toll systems, like E-Z Pass and I-Pass, need to be looked at too, argues Lawson. "Every modern system requires a public security review to be sure there aren't different but related problems," he says. Indeed, in recent weeks, researchers announced flaws in another wireless identification system: the Mifare Classic chip, which is used by commuters on transport systems in many cities, including Boston and London. However, last week, the Massachusetts Bay Transportation Authority (MBTA) filed a lawsuit to prevent students at MIT from presenting an analysis of Boston's subway system.

The Bay Area Metropolitan Transport Commission (MTC), which oversees the FasTrak toll system, maintains that it is secure but says it is looking into Lawson's claims. "MTC is in contact with vendors who manufacture FasTrak lane equipment and devices to identify potential risks and corrective actions," says MTC spokesman Randy Rentschler. "We are also improving system monitoring in order to detect potentially fraudulent activity."

In the past, authorities have insisted that the FasTrak system uses encryption to secure data and that no personal details are stored on the device--just two unique, randomly assigned ID numbers. One of these is used to register the device when a customer purchases it, while the other acts as a unique identifier to let radio receivers at tolls detect cars as they pass by.

But when Lawson opened up a transponder, he found that there was no security protecting these IDs. The device uses two antennas, one to detect a request signal from the toll reader and another to transmit its ID so that it can be read, he says.

By copying the IDs ­­­of the readers, it was possible to activate the transponder to transmit its ID. This trick doesn't have to be carried out on the highway, Lawson notes, but could be achieved by walking through a parking lot and discreetly interrogating transponders.

What's more, despite previous claims that the devices are read only, Lawson found that IDs are actually stored on rewritable flash memory. "FasTrak is probably not aware of this, which is why I tried to get in touch with them," he says. It is possible to send messages to the device to overwrite someone's ID, either wiping it or replacing it with another ID, says Lawson.

"Access to a tag number does not provide the ability to access any other information," says MTC's Rentschler. "We also believe that significant effort would need to be invested in cloning tags." He adds, "If any fraudulent toll activity is detected on a customer's account, the existing toll-enforcement system can be used to identify and track down the perpetrator."

Lawson says that using each stolen ID just once would make it difficult to track down a fraudster. A better solution, he believes, would be to require toll readers and transponders to carry out some form of secure authentication. But this would require changes by MTC. As an alternative, Lawson is working on a privacy kit to let drivers turn their transponders on and off so that they are only vulnerable for a brief period as they pass a toll.

There is another way, he says. "It's probably in the user's best interest to just leave it at home." This is because FasTrak uses license-plate recognition as a backup.

Ross Anderson, a professor of security engineering at Cambridge University, in the U.K., says that "very many embedded systems are totally open to tampering by anyone who can be bothered to spend some time studying them."  Competent use of encryption is the exception rather than the norm, Anderson adds, and the situation is unlikely to change soon. "One industry after another is embracing digital technology, and none of them realize that they need computer security expertise until it's too late and they get attacked," he says.

Bruce Schneier, chief security technology officer at BT, based in Mountain View, CA, says that it is too easy for companies to get away with lousy computer security. "Honestly, the best way is for the transportation companies to sue the manufacturers," he says. "Then they'll think twice about selling shoddy products in the future."

Sepa Clarifies Sepa Cards Framework with new Q&A

European Payment Council clears up Sepa for Cards confusion


The European Commission and the European Central Bank have welcomed a document published by the banking industry-backed European Payment Council that paves the way for a competitive single market for card payment card schemes by 2010.

The document, which takes the form of a Q&A, clarifies key aspects of compliance with the Sepa Cards Framework (SCF) for payment card schemes and banks, as well as the conditions for geographical coverage of card schemes within the Euro zone.

In particular, it rules that any national card scheme can be deemed to be compliant with the SCF if the cards it issues are technically and commercially capable of being accepted everywhere in the Sepa territory. Earlier interpretations of the Framework appeared to imply that a card scheme could only be deemed SCF-compliant if it covered all 31 Member states.

The ECB and Commission had expressed fears that such an interpretation would create a "de facto monopoly" for Mastercard's Maestro debit card system and had been encouraging banks to set up an alternative scheme in competition.

The ECB had become particularly concerned about moves by some banking associations to ditch domestic schemes in favour of internationally-accepted programmes by MasterCard and Visa.

The new guidance from the EPC clarifies the situation and makes it clear that the Sepa provisions for cards will allow many - possibly national and regional - schemes to develop into 'SCF compliant' schemes.  Nonetheless, the Commission warns that work is still needed by the EPC to develop a full set of technical standards allowing any card to be used, for payments in euro, potentially anywhere in the Sepa area.

"This is a precondition for the expansion of existing domestic debit card schemes across the Sepa countries, for the emergence of (a) new European card scheme(s), for pan-European processing and certification, and for market consolidation," says the Commission in a statement.

"More competition would be very welcome," the Commission continues. "The success of new initiatives will depend crucially on banks not simply selling the national debit card scheme to the existing schemes."

The European Payment Council's Q&A.

Gartner's Avivah Litan on PCI Version 1.2

In an article pubished in ComputerWorld last week, Avivah Litan, distinguished analyst at Gartner shared her thoughts on the summary of changes of PCI 1.2. 

Here they are:

The new version is a "definite improvement" on the existing PCI standard, said Avivah Litan, an analyst at Gartner Inc. But, she added, the PCI council appears to have missed a chance to introduce some other long-needed changes. 

According to Litan, one of the biggest issues with the PCI standard is that it makes very little distinction between networks belonging to large companies that process large volumes of card transactions and those belonging to businesses with much smaller transaction volumes. In large, complex network environments, it's often hard to say what exactly is covered by PCI and what isn't, she said. The standard, Litan claimed, allows for too much interpretation and leaves it entirely to PCI assessors to determine the scope of what needs to be protected.

Moreover, the standard is targeted primarily at e-commerce systems and isn't always clear on how the requirements should be applied in highly distributed brick-and-mortar environments, Litan said. For instance, many retailers continue to connect servers at each of their stores to systems in other locations but thus far, at least, the PCI standard has provided little guidance on that risky practice.

Litan said there also is considerable ambiguity surrounding the requirements for third-party service providers, such as call centers that might be processing cardholder data on behalf of retailers. "What are your obligations," she asked, "if you are taking in card numbers and phone numbers and entering them into systems that are not yours?"

Another key missing element is guidance on how end-to-end encryption of cardholder data would affect a company's compliance obligations, Litan said.

To Litan, the new version of the standard would have been an ideal opportunity for the PCI council to have incorporated language clarifying such issues. "The questions that come up every day are not addressed at all by this upgrade," she said. "This is just really more of tinkering around the edges."

Saturday, August 23, 2008

Partially Shredded Bank Checks Used as Packing Material?


Check This Out:         


I saw this on CNN this morning and thought it would make for an amusing post.  A Texas company uses a bank's processed checks for packing material.  Some of the checks are not even fully shredded and contain drivers license numbers, routing numbers, addresses and bank account numbers.  The video clip above, if nothing else is entertaining.  Here's an excerpt from the video story...

"I was just in shock. I couldn't believe they were using shredded up checks as packing material," said Michelle McBride.  So Michelle and her step daughter Amelia started piecing it all together and found out they were right.  WHH Ranch uses its local bank's shredded checks to cushion their jars. They're checks from hospitals, medicare, schools, businesses, personal accounts, even government agencies.  WHH Ranch Company owner Billie Hamzy says, "We've been doing it so long. We are all out of sorts about it because it's so out of place for something like this to happen."  Hamzy says in the roughly 20 years his company's used the bank's shredded paper, the McBrides are the first customers to notice.  "That he knows of. How does he know he doesn't have a particular customer who is doing this to get this information," Michelle said.

It's information the McBrides found is not too hard to unravel. Michelle says, it's "very easy. You look at the colors, then you get the routing numbers and the bank information."

"We didn't piece any of this together. We just taped it to hold it all together. None of this is torn through at all," Amelia said."You get the wrong people getting this information, they could have a hay day with one box, a hay day and a shopping trip. It's scary." Michelle said.

Disqus for ePayment News