Sen. Dick Durbin hates free markets but loves crony capitalism. Durbin has carried water for big box retailers for years and was successful in enacting a measure to force price-controls on interchange fees for credit cards — a measure that helped his friends in retail at the expense of consumers.
Now Durbin is at it again, pushing a measure he argues will cut down on credit card fraud but is, in reality, nothing more than window dressing for the stores have provided hundreds of millions of credit card numbers to cyber thieves.
It’s no secret that the retail stores have become juicy targets for crooks looking to steal credit card numbers. Target’s computer system was breached and 70 million credit card numbers were stolen in one feel swoop. Home Depot was responsible for 56 million credit cards being stolen. Rather than work with security experts and credit card companies, the stores have turned to their lobbyists to demand a “one-size-fits-all” security solution, which offers little or no security at all. That “solution” is called “Chip and PIN.”
Durbin has become obsessed with pushing a measure that would require consumers to input a four-digit PIN number before using a credit card. Besides the inconvenience of remembering different PIN numbers for different credit cards, the reality that a four-digit PIN offers little of no improvement over the status quo. If someone is sophisticated enough to crack a security system on a Home Depot or Target, they can certainly write a simple program to crack the 10,000 possible combinations of a PIN. It should take about a Nano-second.
Despite the obvious reality that a PIN security system is a red herring offered up by retailers to distract politicians from data breaches, Durbin continues to press ahead as an agent for retailers. He lambasted the FBI for failing to include his PIN option in their final version of its consumer bulletin that found even the newest types of credit cards can still be vulnerable to fraud. The bulletin “raises significant questions about…whether the FBI is taking appropriate steps to warn against and deter payment card fraud involving lost or stolen cards,” Durbin wrote.
The sad reality is a government “solution” is nothing more than a blue-print for crooks to break. InEurope where “Chip and PIN” is used, there has been an increase in online fraud and after an initial drop, fraud actually increased as criminals figured out where the “Chip and PIN terminals” were produced and devised ways to harvest credit card information.
The free market, and frankly the credit card companies, have more at stake at finding a solution to this than the retailers who have been burned by subpar security on their consumer’s personal information.