NEEDHAM, Mass. - Two recent instances of card fraud highlight the need for tighter controls on prepaid cards and increased protection from ATM/debit card-skimming, according to Boston-based consultancy TowerGroup.
The fallout from the TJX fiasco was foiled at a Wal-Mart near the University of Florida in Gainesville as a ring of thieves from Miami were apprehended attempting to use gift cards they had converted from stolen TJX credit card account numbers. Industry estimates suggest up to $8 million was loaded on gift cards purchased at Wal-Mart and Sam's Club retail locations in Florida. And the full scope of the impact has not been fully realized, TowerGroup says.
A new research report from TowerGroup, published in January 2007, highlights the vulnerability of store-branded gift cards because, in part, of their anonymous nature.
Then the debit-card breach in Canada, which led to the freeze of thousands of accounts after cards issued by the Bank of Montreal, Royal Bank of Canada and CIBC, were suspected compromised, has only reinforced the need for more stringent controls, the consultancy says.
In the Canadian case, $105,000 in cash and more100 cards have been recovered, but the full scope of the breach has yet to be resolved.
TowerGroup research identifies debit-card fraud as a particular hot spot for criminals, and while the industry has worked to contain fraud with data analytics, consumer confidence has suffered, even though incremental losses have been minimal.
